Switzerland grows, franc restrainedBy Arnaud Masset
The EUR/CHF has risen in March as much as 2.6% to 1.1749, and we expect it to keep grinding higher towards 1.20, because the Eurozone recovery will keep attracting investors’ money. Meanwhile, this slight depreciation of the franc is welcomed by Switzerland’s Economics Ministry (SECO). A cheaper Swissie should stimulate exports. However, a trade war initiated by the USA could dampen growth.
A report today from SECO forecasts a broad-based economic upswing. SECO’s revised growth rate for 2018 is 2.4%, up from its December fix of 2.3%. 2019 GNP should climb 2%, just above the 1.9% previously estimated. The moderate slowdown in 2019 is mostly due to a slackening in construction (1.1% growth in 2018 and 0.3% in 2019). Personal consumption’s forecast has not been revised: it is expected to expand at 1.4% in 2018 and 1.5% in 2019. The job market is still bright. Unemployment should continue to fall, easing from 2.9% in 2018 to 2.8% the following year. Unfortunately, this will not translate into real wage growth. SECO also revised its 2018 inflation forecast up, 0.3% to 0.6%, while the following year forecast was left unchanged at 0.7%.
Russia to cut ratesBy Vincent-Frédéric Mivelaz
Following President Vladimir Putin’s bang-up election victory on Sunday, the Central Bank of Russia is expected to cut interest on Friday. As the economy recovers from recession in 2015, with 2018 GDP growth estimated at 1.80% and February’s consumer prices rising 2.2% annually, the bank will likely be dovish and cut the current interest rate of 7.5% by 25 basis points. USD/RUB has been stable this year, currently trading at 57.71 and expected to head lower along the 57.50 range in the short-term.
Putin begins his fourth and (supposedly) last mandate as president enjoying broad popularity. He will be supporting multiple projects of foreign direct investment, privatization within the economy, access to qualified labour and enhanced credit for small- and medium-sized businesses.