Corporate Press Release

Press Release

Economic survey by Credit Suisse in cooperation with the Centre for European Economic Research (ZEW)

Credit Suisse ZEW Indicator: Expectations remain dampened

Economic expectations for Switzerland have diminished in November, according to the Credit Suisse ZEW Indicator, which declined by 9.9 points to the -64.3-point mark. The balance for the assessment of the current economic situation also recorded a deterioration, dipping by 16.2 points to the -4.8 level. The balance for inflation expectations reached -17.0 points (-20.1 points versus the previous month’s reading), while the forecast for short-term interest rates edged down just slightly month-on-month to the -2.4-point mark. According to the November survey, a growing number of 40.5% of respondents (+6.2 percentage points) once again predict that the Swiss franc will continue to lose ground against the euro in the course of the coming six months.

In the wake of registering a temporary improvement from low levels last month, the Credit Suisse ZEW Indicator trended on the weaker side again in November, dipping by 9.9 points to the -64.3-point mark. Merely 9.5% (+1.0 percentage points) of the financial market experts surveyed this month still forecast a brighter economic climate ahead, while a clear majority of 73.8% (+10.9 percentage points) foresee the Swiss economy deteriorating on a six-month horizon.

The assessment of the present state of the economy continued to follow its downward trend of recent months, with the relevant balance declining by 16.2 points and falling into negative territory at the -4.8 level. Only 11.9% of the survey participants (-8.1 percentage points month-on-month) still view the current economic picture in a “good” light. A steady majority (71.4%) regard the prevailing economic environment as “normal,” while the remaining 16.7% (+8.1 percentage points) see the economy in a “bad” light.

On the heels of the increase recorded the previous month, the share of analysts who anticipate that inflation will climb in a six-month timeframe shrank anew in November. In fact, 17.1% (-7.2 percentage points) of the respondents expect rising inflation rates. A much higher proportion of 34.1% (+12.9 percentage points) assumes that inflation will continue to retreat from the current extraordinarily low levels. On the other hand, most of the experts (48.8%, -5.7 percentage points) foresee a stable trend in the coming months.

The analysts have conveyed persistently significant unanimity regarding their assessment pointing to prevailing stable short-term interest rates in the next half-year, with 97.6% (+9.4 percentage points) sharing this view.

The generally still-positive evaluation of the Swiss stock market lost some optimism this month versus last. Hence, the corresponding balance of expectations for the performance of the Swiss Market Index (SMI) deteriorated by 12.8 points to the 22.5-point mark. The share of experts who foresee a positive trend in the SMI amounted to 45.0% in November, thus shrinking by 10.9 percentage points month-on-month. Nearly one-third (32.5%) of the financial market specialists expect a stable stock market outlook.

The share of survey participants who predict that the Swiss franc will lose ground against the euro continued to grow in November, from 34.3% to 40.5%. In contrast, merely 7.1% (-7.2 percentage points) of respondents believe that the Swiss currency will gain terrain versus the common currency.

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: banks, 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.