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E. GUTZWILLERu
bi
Basel, Q2-2016 (April 2016)
Economic Environment and Outlook
 Switzerland: In spite of the uncertainties concerning the emerging markets and the European economy, the outlook in Switzerland is still resilient, with a moderate path growth of 1%. The strength of the Swiss franc remains a big concern, having an impact on the competitiveness of the corporate sector. Companies are less competitive but are
also supported by lower costs related to oil and other commodities. Domestic consumption will be fairly stable,
unemployment being low. With negative inflation in 2016, the SNB will continue its accommodating monetary
policy. Expected increasing growth in Europe will have a positive impact.
 USA:

Europe:
 Asia:
The US economy will continue to expand in the second quarter 2016 in spite of growing fear of a recession.
Consumption is positive, jobs continue to increase, the savings rate is rising. Prices in the housing sector are
improving, the residential investment should remain buoyant. Short rates will not rise before the year-end but
the Fed will be vigilant due to the need, under pressure from the financial markets, to continue to tighten the
monetary policy and control public deficits. The problems of the financial sector are not over, new tough rules
have to be implemented, but losses in banks are already decreasing. US companies are fairly competitive but
the overall corporate default rate will rise and will be much higher in the energy sector. Europe and a weak Euro will continue to be challenging. This balanced scenario could be put in jeopardy by the international tensions, the debt and political crisis in Europe and much less growth in China. Brazil and Russia are already in
recession.
The industrial production is picking up in the Continent. GDP growth rates are improving slowly, some European countries are struggling to get out from their public debt financing problems. Greece remains a problem.
The ECB has announced a huge package of measures to stimulate the economy with interest rate cuts, expanded quantitative easing and incentives to increase the bank lending. There is a decrease of confidence and trust
in the monetary system but the markets will be taking a more positive view of the central bank action in the
medium term. Manufacturing is rising but inflation is too low. In the UK, the Bank of England could be forced
to be less generous, it ponders on a new monetary strategy as the economic growth is strengthening and inflation remains subdued. Scotland and the referendum on the membership of the European Union will continue to
bring uncertainty.
The government in Japan is pushing for more growth and the central bank, with its negative interest rate policy, pledged to expand again its asset purchases, buying bonds and treasury bills. The public debt has already
soared. The economy will start to recover, private consumption and public investment fuelling growth. A
weakening yen is easing corporate pessimism. In China, exports are less vigorous than expected, with a weak
domestic demand economy is still subdued. In India the new government continues to spur policy changes to
improve growth.
Currencies - Outlook
 CHF:
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USD:
EURO:
GBP:
JPY:
Gold:
Oil:
stable, due to its role as a safe haven currency and the relative good performance of the Swiss economy. The
SNB will continue to sell Swiss francs to avoid a further appreciation.
firm
stable
volatile, could weaken.
to remain weak, likely to soften again if more central bank intervention.
recovery with continuing economic and geopolitical uncertainties.
weak but could stabilise
Financial Markets - Outlook
Interest Rates
Bonds
Stock Markets
Switzerland
low
stable
weak
Europe
low
positive
weak
UK
low
stable
volatile
USA
stable
stable
volatile
Japan
low
stable
weak
The aforementioned Economic Environment and Outlook shall not constitute a recommendation or an investment advice. It is not the result
of any financial analysis and the “Directives on the Independence of Financial Research” issued by Swiss Bankers Association does therefore
not apply.
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