Switzerland’s KOF Economic Institute upgraded its economic outlook citing improved economic situation of major trading partners and the depreciation of the Swiss franc against the euro.
In the Spring Forecast, the think tank said gross domestic product is forecast to grow 2.5 percent this year instead of 2.3 percent estimated in December.
However, this increase is partly driven by the fact that the nation hosts the headquarters of some of the major international sports federations and associations, KOF said.
A fair chunk of the license fees from large-scale international events such as the Olympic Games in South Korea is included in Switzerland’s GDP figures.
The growth outlook for 2019 was raised marginally to 1.8 percent from 1.7 percent.
According to KOF, the Swiss franc’s depreciation against the euro and the slightly higher price of oil are likely to push up inflation. Inflation for 2018 was seen at 0.7 percent versus the previous forecast of 0.5 percent. The projection for 2019 was retained at 0.5 percent.
From an inflationary perspective, there is thus no need for a more restrictive monetary policy.
Given the current situation, KOF expects the Swiss National Bank to replicate European Central Bank’s monetary policy in order to maintain the usual interest-rate differential between franc- and euro-denominated investments.