ZEW-CS Financial Market Test Switzerland - Economic expectations look somewhat less pessimistic

The Financial Market Test Switzerland, carried out by the Centre for European Economic Research (ZEW) in cooperation with Credit Suisse, revealed in December that economic prospects brightened up just a little at a very low level. The ZEW-CS indicator of economic expectations edged up by 12.3 points compared with the previous month’s and is now hovering at the -76.2 mark. Although respondents view the current economic situation in a slightly more optimistic light compared to last month’s results, the corresponding balance improved by merely 6.2 points and remains in negative territory at the -7.2 threshold.

A clear majority of the financial market experts surveyed (78.6 per cent) continue to anticipate sinking short-term interest rates, while the balance of inflation expectations remained low at -73.8 points. The outlook regarding the labor market trend turned out to be more downbeat in December, with 97.5 per cent of the experts predicting a rising unemployment rate on a six-month horizon.

Within the scope of this month’s "special question", participants in the Financial Market Test Switzerland were asked to convey their choice of portfolio selection for 2009. According to the responses, roughly 50 per cent of the analysts surveyed aim to reduce the weighting of government bonds. On the other hand, more than one-third of the respondents plan to expand the share of commodities in their portfolios, while just 3 per cent of the experts are considering cutting back on investments in commodities.

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.

Detailed results

More detailed results - including survey participants' assessment of developments in other countries - can be found in this month's edition of the "Financial Market Report Switzerland".

For further information please contact

Christian David Dick (ZEW), Phone: +49/621/1235-305, E-mail: dick@zew.de

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