Furthermore, rallying demand is likely to help ease pressure on margins in the coming months. We continue to expect a slow improvement of the economy. Our forecast for real growth in 2015 is unchanged at just under 1%. The global economy is likely to gather pace gradually over the course of 2016, and this should strengthen foreign demand for Swiss goods and services. Domestic demand is also likely to remain robust. For 2016 as a whole, we expect growth of approximately 1.5%. Interest rates, exchange rates and inflation expectations I will now review changes in monetary conditions and inflation expectations since the beginning of the year. When we discontinued the minimum exchange rate in January, the monetary policies of the major currency areas were set to diverge, and we were aware that this would have significant consequences for international monetary relations. This is exactly what came to pass, and is  2  BIS central bankers’ speeches  clearly reflected in the exchange rate path of the Swiss franc against various currencies. While the Swiss franc/US dollar exchange rate is now virtually the same as it was at the end of 2014, the Swiss franc has appreciated 10% against the euro since the beginning of the year. The export-weighted Swiss franc exchange rate is about 8% higher than it was in January, having gained approximately 20% at times in the interim. In January, concurrently with the discontinuation of the minimum exchange rate, we lowered the interest rate on sight deposits to –0.75%.

Malaysia has also taken advantage of globalisation to strengthen its economic and financial relationships with the major trading blocs across the globe. In 2006, the total value of the external trade exceeded RM1 trillion for the first time. Foreign direct investment has been sustained, particularly into the new areas of growth. The private sector continues as the main driver of growth for the fifth consecutive year, while the public sector plays have a supportive role. GDP per capita at current prices has increased to about USD 6,000 in 2006. While Malaysia continues to attract investment, both domestic and foreign from the traditional sectors, new sectors such as the manufacturing, services, and oil and gas sectors are gaining in importance. Resources are flowing into new growth areas such as revitalised agriculture sector, high-technology manufacturing industries and biotechnology. The services sector such as information technology services, shared services and outsourcing, health and medical tourism, and financial services, in particular Islamic finance has increased its market share. The Malaysian Islamic banking system saw in particular strong performance in 2006 with higher profitability, and has remained well capitalised. Islamic banking assets amounting to about USD34 billion or 13 percent in terms of market share. The takaful sector stands at USD1.7 billion. The Malaysian Islamic capital market has been equally encouraging. Islamic corporate bonds now amounting to USD36 billion, or 48 percent of the total corporate bond issuance in Malaysia. The domestic bond market plays a crucial role in ensuring that the financing needs of the economy are being fulfilled.