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Economic survey by Credit Suisse in cooperation with the Centre for European Economic Research (ZEW)
Economic expectations diminish at high level
Zurich, November 12, 2009 According to the Financial Market Test Switzerland, carried out by Credit Suisse in cooperation with the Centre for European Economic Research (ZEW), economic expectations diminished somewhat in November. In the wake of the strong surge recorded in previous months, the relevant Credit Suisse ZEW Indicator lost ground by 8.6 points, but continued to hover at a high level of 56.4. At the same time, the assessment of the current economic situation once again turned out to be less pessimistic, with the corresponding indicator edging up by 8.8 points to the -46.2 mark. The lion’s share of the financial market experts surveyed (75.0%) still expect short-term interest rates to remain unchanged in the coming months. However, the relevant balance increased by 12.8 points to the 20.5 level in November. The balance for inflation expectations also rose, by 9.2 points to the 40.0 threshold. Although 55.0% of the survey participants still anticipate that inflation will hold steady, 42.5% believe that inflation rates will climb on a six-month horizon.
The results of the latest survey conducted in conjunction with the Financial Market Test Switzerland sketch a slightly less optimistic picture regarding the economic outlook, in the wake of the strong surge recorded in previous months. The relevant Credit Suisse ZEW Indicator for economic expectations diminished by 8.6 points, but continues to hover at a high level of 56.4. Hence, the overriding majority (64.1%) of the financial market experts surveyed still view the economic trend in the coming six months in a basically positive light.
The assessment of the prevailing economic climate brightened up further in November, with the proportion of analysts who regard the situation as “bad” declining by 6.3 percentage points to 48.7%. The balance of indicators for the current economic situation improved by 8.8 points month-on-month, reaching a level of -46.2.
The lion’s share of financial market specialists (75.0%) continue to expect short-term interest rates to hold steady. However, the share of participants who anticipate that short-term rates will increase in the coming six months rose by 12.5 percentage points to 22.5%. The corresponding balance, which had treaded slightly lower in October, edged up by 7.5 points to the 20.0 mark. Most (82.0%) of the respondents foresee no change in the short-term interest rate differential between Switzerland and the Eurozone. The pertinent balance remained almost unchanged (down 2.8 points), reaching a nearly neutral level of 2.6 in November.
Sentiment on the part of the financial analysts regarding the Swiss stock market dampened slightly this month, with 23.7% (up 5.8 percentage points) predicting that the Swiss Market Index (SMI) will lose ground on a six-month horizon. At the same time, a majority of 55.3% (down 13.9 percentage points) of the experts forecast a positive stock market performance. But the corresponding balance dropped by 19.7 points and is now wavering at the 31.6 level.
Most (65.0%) of the respondents see no significant shift in the EUR/CHF exchange rate in the coming six months, while 17.5% (up 7.5 percentage points) believe that the Swiss franc will gain terrain against the euro. The relevant balance was up 10 points, hitting a neutral level of zero in November.
More than half (55.0%) of the participants still expect oil prices to advance. The proportion of specialists who forecast falling oil prices shrank by 10 percentage points to just 5.0%. Regarding the trend in gold prices, 44.7% (down 6.6 percentage points) of the analysts assume that the price of the precious metal will increase further. The balance dipped by 7.1 points to the 26.3 mark.
Expectations regarding the corporate earnings situation and profit margins in Switzerland decreased somewhat in November, while 85% of the experts (down 2.5 percentage points but still at a high level) presume that the unemployment rate will continue to climb in the next half-year.
The survey process and methodology
The ZEW has conducted a similar monthly survey for Germany since 1991. The aim of the Swiss survey is to develop indicators both for Switzerland's general economic climate as well as for the Swiss services sector.
Specifically, survey participants are asked to give their medium-term expectations for important international financial markets as regards the development of the economy, the inflation rate, short- and longer-term interest rates, equity prices and exchange rates. In addition, the financial experts are also asked to assess the earnings situation of companies in the following Swiss services sectors: banking, insurance, consumer/retail, telecoms and services as a whole.
The results represent the net difference between the percentage of positive and negative responses. Figures in parentheses show the changes for each indicator compared to the previous month.
Enquiries:
- Fabian Heller, Analyst Swiss Economy Credit Suisse AG, Tel. +41 44 332 90 61, fabian.heller@credit-suisse.com
- Media Relations Credit Suisse AG, Tel. +41 844 33 88 44, media.relations@credit-suisse.com
- Christian Dick (ZEW), Tel. +49 621 1235 305, dick@zew.de
- Credit Suisse AG
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Disclaimer
This document was produced by and the opinions expressed are those of Credit Suisse as of the date of writing and are subject to change. It has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of Credit Suisse to any person to buy or sell any security. Any reference to past performance is not necessarily a guide to the future. The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable but Credit Suisse does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof.
