BERN: Switzerland could slide into recession this year unless the franc-euro exchange rate improves, an economist fears. Economic output fell 0.2% in the first three months of this year following the Swiss National Bank’s (SNB) decision to abandon its defence of the franc.
Janwillem Acket, chief economist of Julius Baer bank, told swissinfo.ch that he was surprised at how quickly the SNB’s move had negatively affected the economy. Exports slumped 2.3% in the first quarter, according to statistics released on Friday by the State Secretariat for Economic Affairs (Seco).
“It is astonishing that we have seen the impact so early,” Acket told swissinfo.ch. “The consensus was for stagnation. The main impact [of the SNB’s decision] will be seen in the second quarter.” The -0.2% quarter-on-quarter contraction is the worst performance since the opening three months of 2009.
At present the franc-euro exchange rate is hovering below CHF1.05. Acket believes this needs to stabilise to a range between CHF1.05 and CHF1.10 to give the economy a chance to revive.
“We have good employment rates, consumer purchasing power remains high and companies are still investing,” Acket said. “But unless the exchange rate rises above CHF1.05 the risk of short-term recession and deflation will increase.”
