Swiss Inflation Accelerates on Higher Energy Prices

Oct 2, 2007 - Swiss inflation accelerated in September, led by higher costs for heating oil.

Consumer prices rose 0.7 percent from a year earlier after increasing an annual 0.4 percent the previous month, the Federal Statistics Office in Neuchatel said today. Economists expected an inflation rate of 0.8 percent, according to the median forecast of 18 economists surveyed by Bloomberg News.

The Swiss central bank raised its key interest rate on Sept. 13 even as defaults on U.S. subprime mortgages pushed up the cost of credit and clouded the global growth outlook. The Swiss National Bank said rising energy prices and a declining currency may push up import prices and stoke inflation.

"Switzerland still has a low-inflation environment," said Jan Amrit Poser, chief economist at Bank Sarasin in Zurich. "We've had some inflationary pressure from petrol, but the core price index is not signaling danger in any way."

The Swiss economy will probably grow 2.5 percent this year after expanding 3.2 percent in 2006, the fastest pace since 2000, according to the central bank. The SNB forecasts inflation will average 0.6 percent this year and 1.5 percent in 2008.

Energy and housing costs gained 2.4 percent in the year because of higher heating-oil prices, today's report showed. Alcoholic-beverage and tobacco prices advanced 2.9 percent from a year earlier, while the cost of clothing and shoes increased 3.2 percent from a year earlier and was unchanged in the month, according to the statistics office.

Swiss Producer And Import Prices Rise In August

Sep 20, 2007 - Swiss producer and import prices rose 0.3% month-over-month in August, the statistical office said Thursday. Economists were looking for a monthly growth of 0.1%. Compared to last year, producer and import prices climbed 2.7%, while economists expected only 2.6% rise.

The import price index and producer price index advanced 0.3% each from the prior month. On a yearly basis, import prices moved up 2.9% and producer prices were up 2.6%.

Swiss August Trade Surplus Weakens More Than Expected

Sep 20, 2007 - The Swiss trade surplus amounted to CHF637.1 million in August, the Federal Administration of Customs said Thursday. The number came in weaker than the expected surplus of CHF0.93 billion. The trade surplus narrowed from CHF1.51 billion recorded in July. However, the trade surplus showed an annual growth of 15.5%

Exports grew 9.7% in real terms and imports climbed 6.3% in August. In nominal terms, exports were up 9.1% to CHF14.54 billion and imports increased 8.8% to CHF13.90 billion.

SNB Raises Benchmark Rate to Head Off Inflation

Sep 13, 2007 - The Swiss central bank raised its benchmark interest rate for the eighth time since late 2005 to head off inflation even as rising credit costs threaten to weigh on economic growth.

The Swiss National Bank's governing council, led by Jean- Pierre Roth, increased the 3-month Libor target rate by a quarter-point today to 2.75 percent, the highest since September 2001. Eleven of 20 economists in a Bloomberg News survey forecast the increase while nine predicted the Zurich-based central bank would leave the rate unchanged.

The SNB is concerned that inflation will accelerate after the economy expanded at the fastest pace since the turn of the decade last year. Today's decision comes a week after the European Central Bank and Bank of England left rates unchanged amid concern the U.S. housing slump, which has made banks reluctant to lend and pushed up borrowing costs, will harm economic growth.

"Caution is certainly guiding all central banks at the moment, but the SNB is in a different situation," said Janwillem Acket, chief economist at Julius Baer Holding AG in Zurich, who correctly forecast the quarter-point increase. "We have a booming economy."

Inflation will average 0.6 percent this year before accelerating to 2 percent in mid-2008, the SNB said in a statement. The economy will expand 2.5 percent this year after growth of 3.2 percent in 2006.

Franc Gains

The Swiss franc extended gains against the euro, rising to 1.6430 after the decision from 1.6475 yesterday. It rose to 1.1819 from 1.1849 against the dollar.

Switzerland's second-quarter economic growth was driven by the largest investment in equipment and machinery since the three months ending March 1998, suggesting companies are expanding to meet full order books. Increased hiring pushed unemployment to a five-year low in August.

"Looking at Switzerland's economic fundamentals, the SNB has plenty of room to continue hiking rates," said Rajel Khambhaita, an economist at Informa Global Markets in London.

While a decline in the franc has boosted the economy by making Swiss exports more competitive, it also threatens to stoke inflation by making imports more expensive.

Still, inflation slowed to 0.4 percent in August from 0.7 percent in the previous month.

SNB governing council member Thomas Jordan said Aug. 28 the outlook for second-half growth has become less certain because of turmoil in financial markets. Switzerland's growth may be pulled back by a slowdown in the U.S. and Europe.

The Organization for Economic Cooperation and Development lowered its growth forecast for the U.S. to 1.9 percent from 2.1 percent and for the euro region to 2.6 percent from 2.7 percent.

Switzerland's benchmark rate of 2.75 percent is the second- lowest of major economies after Japan's 0.5 percent, encouraging investors to borrow francs to invest in countries with higher interest rates. The franc has fallen about 2.3 percent against the euro this year.

Swiss Current Account Surplus Posts Robust Growth For Full Year 2006

Sep 12, 2007 - Swiss current account surplus grew to CHF73.6 billion in 2006, compared to the surplus of CHF62.8 billion in 2005, the Swiss National Bank, SNB, said Wednesday. The current account surplus amounted to 16% of GDP in 2006, up from 14% in the previous year.

The expansion of the current account surplus was underpinned by the 13% nominal surge in exports of goods and services. Favorable overseas market conditions helped the exports of most industries, the SNB said. Service exports were bolstered by high growth rates at banks and insurance companies, increased merchanting income. Receipts from tourism posted a 6% gain to CHF13 billion.

Imports of goods increased 11% in nominal terms, while imports of services rose due to expenses of the tourism sector. The surplus from trade in goods rose to CHF5.1 billion in 2006 from CHF3 billion in the previous year, while the surplus from trade in services advanced to CHF33.2 billion from a surplus of CHF28.3 billion in the earlier year.

Labor income of persons employed by international organizations in Switzerland grew 2%. Portfolio income from Swiss investments abroad swelled to CHF31 billion. Income from equity securities grew CHF2 billion to CHF13 billion in 2006, while income from debt securities also increased CHF2 billion to CHF 18 billion. On the other hand, foreign investors investment income on their holdings in Switzerland climbed by a fifth to CHF17 billion in 2006. Net income gained CHF1 billion to CHF 14 billion in 2006.

Current transfers from abroad advanced CHF2 billion to CHF 17 billion, while current transfers abroad remained stable at CHF30 billion. Private transfers registered a growth of CHF2 billion to CHF13 billion.

The financial account posted a net outflow of CHF91 billion in 2006, compared to the outflow of CHF84 billion in 2005. Net capital outflow was CHF54 billion in 2006, while portfolio investment came in at a net outflow of CHF 54 billion too, compared to the net outflow of CHF66 billion in the last year. Other investment showed a net capital inflow of CHF18 billion.

Direct investments abroad climbed to CHF73 billion in 2006 almost equaling the high of year 2000, the SNB said. This compares with the CHF63 billion worth of direct investments made in the previous year. The main investment destinations were the US, which took CHF22 billion, while Singapore attracted CHF5 billion in investments and countries in Central and South America took CHF14 billion in investments.

Foreign direct investment in Switzerland amounted to CHF19 billion. Derivatives and structured products were reported in the balance of payments for the first time. Domestic investors purchased CHF7 billion worth of structured products issued by foreign issuers, while foreigners invested CHF4 billion in structured Swiss assets.

The reserve assets of the SNB slumped to a negative CHF0.4 billion at the end of 2006, from a positive balance of CHF22.7 billion at the end of 2005.

Swiss full year GDP growth forecast hiked to 2.6 pct from 2.4 pct previously

Sep 9, 2007 - Swiss GDP growth for 2007 has been hiked to 2.6 pct compared to an earlier forecast of 2.4 pct, the University of Zurich's centre for economic research (KOF) said in its latest survey of economists.

At 2.2 pct, GDP growth for 2008 is seen slowing down compared to 2007, but slightly higher than an earlier consensus of 2.1 pct.

KOF's latest forecast on full-year exports growth was hiked to 8 pct, from 6.4 pct earlier, but is seen weaker in 2008 at 5.4 pct.

The unemployment rate forecast for 2007 was cut to 2.8 pct, compared to 2.9 pct previously and is expected to fall further in 2008 at 2.5 pct.

Investment in the construction sector is expected to grow by 3.9 pct in the current year compared to an earlier forecast of 3.2 pct.

Construction growth for 2008 is seen higher at 2.7 pct versus 2.3 pct previously, but slower compared to 2007.

Swiss Economic Growth Remains Strong In Q2

Sep 4, 2007 - The Swiss economy remained on track to achieve robust expansion in the second quarter, official data indicated Tuesday. Higher consumer spending, investment in software and equipment as well as a strong trade balance drove growth in the second quarter.

A report from the Berne-based State Secretariat for Economic Affairs or SECO showed that the Gross Domestic Product or GDP rose 0.7% sequentially in real terms in the second quarter, logging the same pace as in the previous quarter. The quarterly growth matched economists' expectations. Initially, the first-quarter sequential growth was estimated at 0.8%.

On an annual basis, the mountain economy grew 2.8% in the second quarter, slightly accelerating from a revised 2.7% witnessed in the first quarter. The first-quarter annual growth underwent strong upward revision from the 2.4% initially recorded. Economists had expected the growth rate to hold steady at 2.4% in the second quarter.

Household spending eased to 0.5% in the second quarter from the 0.7% seen in the first quarter. Significant rise in spending was witnessed in healthcare, furniture, communications and financial and insurance services.

The Swiss investment bank UBS said recently that its Consumption Indicator is showing that Swiss consumer spending is still very buoyant. UBS noted that outlook for consumer spending is upbeat amid the job market recovery. The bank expects real private consumption growth of 2.5% in 2007, following an increase of 1.9% in 2006.

Investment grew 2.6% quarter-on-quarter led by a 7.6% enhancement in outlay in equipment and software. Meanwhile, investment in the construction sector contracted 3.7%.

In the second quarter, export growth moderated to 0.5% from the 2.5% jump seen in the previous quarter. The slow down was blamed on a 0.5% decline in overall exports including valuables. Excluding valuables, overall exports rose 0.9%. Services exports registered a robust growth of 3.1%.

Imports climbed 0.9% in the second quarter, with both goods as well as services imports rising 0.9%.

Government data showed that Swiss trade surplus was 1.57 billion francs in July, slightly down from the 1.65 billion francs recorded in the prior month.

On the production side, the sector dominated by industry revealed a value addition of 1.2% during the quarter. Hospitality industry, transport and communications as well as the financial market services sector had a 1.2% rise in value addition during the second quarter.

Meanwhile, the value added in the construction sector dropped 1.5%. Declines were also seen in the public services and agricultural sectors.

The GDP Deflator, a measure of inflationary pressures, rose 1% year-over-year in the second quarter, matching the pace seen in the previous three months.

In 2006, the Swiss economy grew 3.2%, much stronger than the 2.4% growth recorded in 2005. In June, the SECO raised its GDP growth forecast for 2007 to 2.3% from 2%. The SECO also revised up the 2008 growth projection to 1.9% from 1.7%.

The Swiss bank Credit Suisse forecasts economic growth at 2.2% for 2007 and is expected to slow to 1.9% in 2008. The bank expects jobless rate to remain steady at 2.8% in both the years. The UBS sees growth of 2.6% in 2007 and 2.3% in 2008.

Elsewhere, the Swiss National Bank or SNB has voiced concerns over the impact of the recent turmoil in financial markets, following the U.S. subprime rout. The central bank sees uncertainty in the growth momentum in the Swiss economy during the second half of the year.

The central bank is set to decide on interest rates in September. Latest data showed that annual inflation slowed to 0.4% in August from the 0.7% seen in the previous month. Slowing inflation coupled with the market turbulence is likely to be reason enough for the central bank to stay pat on interest in September. In June, the SNB raised its key interest rate to 2.5% from 2.25%.

Swiss CPI Inflation Decelerates In August

Aug 31, 2007 - Consumer prices in Switzerland grew 0.4% on an annual basis, in August, the statistical office said, Friday. Consumer prices advanced 0.7% in the previous month. Economists had predicted a 0.8% annual rise in August. On a monthly basis, consumer prices eased 0.1%, while economists were looking for a 0.2% increase. Prices tumbled a monthly 0.6%, in the last month.

In August, prices in the transport group eased 1.0%, pulled by the 3.6% decline in gasoline prices. Communication prices decreased 0.2%, due to a fall in tariffs of telephone conversations on the fixed network, while housing and energy prices slipped 0.1%. In comparison, prices of food and soft drinks gained 0.1%, while prices of other goods and services edged up 0.1%.

Prices of products of Switzerland remained stable on a monthly basis, while prices of imported products dropped 0.4%.

On an annual basis, prices of gasoline declined 4.4% in August, while prices off diesel remained unchanged. Prices of fuel oil decreased 4.9%, while the level of rents rose 2.1%.

The prices of products of the country grew 0.9% annually in August, while prices of imported products eased 0.7%.

Swiss 2007 GDP forecast raised to 2.3 pct from 2.0; 2008 GDP at 1.9 pct

Jun 22, 2007 - Switzerland's GDP is now expected to grow by 2.3 pct in 2007, up from earlier forecasts of 2.0 pct, the Swiss state secretariat for economic affairs (SECO) said.

SECO also raised its GDP growth forecast for 2008 to 1.9 pct from 1.7 pct.

The government body said it expects the 'robust and broadly underpinned' upturn in the economy to continue without overheating, though increased risks to price stability could now emerge