ZEW-CS Financial Market Test Switzerland - Economic Expectations for Switzerland Back in Positive Territory

According to the Financial Market Survey Switzerland, carried out by the Centre for European Economic Research (ZEW) in cooperation with Credit Suisse (CS), economic expectations continued to brighten up further in June. The ZEW-CS-Indicator climbed back into positive territory for the first time since September 2006, reaching the 9.7 mark (up 13.6 points).

The indicator for the assessment of the current economic situation remained practically unchanged in June at the minus 67.7 level (up 0.9 points). Inflation expectations increased noticeably again this month, with the corresponding indicator rising by 30.5 points to the 22.6 threshold.

Within the scope of this month’s "special question," participants in the Financial Market Test Switzerland were asked to express their views regarding the course of the economic recovery. Half of the experts anticipate that a renewed correction is forthcoming on the heels of the current economic revival ("W-shaped" recovery), while roughly one-fourth of the respondents expect to see a "U-shaped" recovery, i.e. no further downturn is expected. The financial market experts were asked also to convey their opinions regarding the specific timing of when the central banks would probably commence their interest rate-hiking cycles again. The largest share of respondents (57 per cent) predict that the initial rate hikes will likely kick off already in the first half of 2010, while one-third of the analysts regard the second half of 2010 as the most probable timeframe.

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