Niklaus Blattner: Current economic situation and monetary policy
Summary of a speech by Mr Niklaus Blattner, Vice-Chairman of the Governing Board of the Swiss
National Bank, at the 1st Basel Economic Talks of the National Bank, Basel, 5 May 2006.
The complete speech can be found in German on the Swiss National Bank's website (www.snb.ch).
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Switzerland's economy clearly picked up pace last year. Exports were the main engine for growth,
while construction and consumer expenditure also buoyed up economic activity. Companies were
nevertheless reluctant to invest or hire new staff. The recovery was thus still patchy, and inflation risks
were accordingly low.
Since the beginning of the year, there has been a stream of positive news from Switzerland and
abroad. The US and Asia are still enjoying a high level of economic momentum, and in Europe, too,
the recovery is becoming more firmly entrenched. Benefiting from the favourable international
environment, the upswing in Switzerland has gained a broader footing. The investment environment in
particular seems much more attractive now than last year. This applies especially to Northwestern
Switzerland. Many companies in this region have stated that they now want to implement investment
plans that have been put on hold for a long time.
The Swiss National Bank expects Switzerland's GDP to expand by just over 2% this year. The
economic upturn does not jeopardise price stability, at least not in the short term. In the long term,
however, the current low level of interest rates is not compatible with price stability. If the economy
performs as expected, the National Bank will further pursue the gradual adjustment of its monetary
policy that has already been initiated.