ZEW - CS Financial Market Test Switzerland: Second Survey Confirms Positive Economic Outlook for Second Half of 2006

CH Indicator of Economic Sentiment

The Centre for European Economic Research (ZEW), in cooperation with Credit Suisse (CS), has for the second time carried out the Financial Market Test Switzerland. The results continue to show the optimistic view of the survey participants regarding the economic prospects in Switzerland for the second half of 2006.

Financial market experts' expectations on the inflation rate as well as on short- and longer-term interest rates are nearly unchanged compared to last month's survey, with a clear majority of respondents anticipating these parameters to increase during the next six months. In their view, the Swiss franc is more likely to appreciate against the euro than to depreciate.

In line with the encouraging economic data for the first half of the current year, the financial market experts give an even more favourable assessment of the current economic situation in Switzerland than they did in the June survey. The corresponding indicator increased by 13.1 points and now stands at 88.9 points.

The positive sentiment for the future economic development still prevails. Higher oil prices on the back of escalating violence in the Middle East have had no visible impact on the experts' assessments so far. A further improvement in the economy is expected by 37.8 percent, whereas 48.9 percent anticipate no change, and 13.3 percent expect the situation to worsen. The balance of the positive and negative assessments for this indicator therefore lies at 24.5, a slight increase of 1.9 points compared to June.

However, inflation rate expectations have likely been determined by the surge in oil prices. An increase is expected by 60 percent of the respondents, a decrease of only 4.4 percent (4.8 percent in the previous month). The corresponding indicator decreased by 2.5 points from last month's level and is now at 55.6 points.

Respondents gave a much more positive outlook on equity markets, with 77.3 percent (+15 percent) expecting the SMI to rise further.

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.

The detailed results can be obtained from the "Switzerland Financial Market Report", which is published on a monthly basis.


Prof. Dr. Michael Schröder (ZEW), Phone: +49/621/1235-140, E-mail: schroeder@zew.de  

Thomas Herrmann (CS), Phone: +41/44/333-5062, E-mail: thomas.herrmann@credit-suisse.com