ZEW-CS Financial Market Test Switzerland - Economic Expectations on Upward Trend

The economic expectations for Switzerland on a six-month horizon have brightened up once again in May. This reveals the Financial Market Test Switzerland, carried out by the Centre for European Economic Research (ZEW) in cooperation with Credit Suisse. The ZEW-CS indicator increased in May by 23.8 points to the minus 3.9 threshold, but is still hovering just barely in negative territory.

Although the indicator for the assessment of the current economic situation declined by 2.6 points to the minus 66.0 mark, signs of stabilization are increasingly discernable. Inflation expectations recorded a more noticeable increase in May compared with the previous month’s survey. The corresponding indicator gained 35.6 points to the minus 7.9 level. At the same time, expectations regarding short-term interest rates rose, too, with 15.7 percent of the survey participants predicting advancing rates on a six-month timeframe. Still, the overriding majority of respondents (80.4 percent) continue to expect interest rates to hold steady at current levels.

Within the scope of this month’s “special question,” participants in the Financial Market Test Switzerland were asked to convey their assessments regarding the effectiveness of monetary and fiscal policies amid the prevailing economic environment. The responses show that the analysts view the strategy of “quantitative easing” as an effective instrument for stimulating lending activity. However, 78 percent of the respondents foresee a risk that the monetary-policy measures could result in rising inflation rates (see link below).

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.

Contact

Dr. Gunnar Lang (ZEW), Phone: +49/621/1235-372, E-mail: lang@zew.de

Fabian Heller (Credit Suisse), Phone: +41/44/3329061, E-mail: fabian.heller@credit-suisse.com