For the euro area and the US, we have revised our growth forecasts slightly upwards. Economic recovery and convergence with the inflation target are most advanced in the US. This prompted the US Federal Reserve to carry out a number of interest rate adjustments and to initiate the reduction of the balance sheet this year. The coming quarters are likely to see a gradual continuation of monetary policy normalisation in the US. By contrast, the European Central Bank intends to pursue its asset purchase programme until at least September 2018, and to leave its key rates unchanged beyond that horizon. In Japan, too, monetary policy is expected to remain expansionary. Alongside the global economic baseline scenario, the risks also need to be taken into consideration. In the short term, global growth could be stronger than projected in the baseline scenario, due to the significant upturn in household and business confidence. In the medium term, however, risks for the international economy are still to the downside. These risks include ongoing structural weaknesses, political developments in certain countries, and potential international tensions. Furthermore, the normalisation of monetary policy in the advanced economies presents challenges. An abrupt rise in the currently very low capital market interest rates and risk premia, in particular, could negatively impact the global economy. Swiss economic outlook  I shall now turn to the economic outlook for Switzerland. GDP grew in the third quarter at an annualised 2.5%, lending further momentum to the economic recovery.

Growth was primarily driven by manufacturing, which benefited from  Page 2/4  Berne, 14 December 2017 Thomas Jordan  News conference  dynamic global economic developments and the weaker Swiss franc. Accordingly, exports recorded marked gains. Investment in equipment also grew noticeably. In the wake of this development, capacity utilisation in manufacturing increased further. The overall economic situation improved, too. Higher capacity utilisation, a more robust earnings situation and favourable global economic prospects contributed to a further rise in business confidence. These factors generally strengthen the willingness to invest. The gradual recovery on the labour market has also continued. The unemployment rate declined again slightly through to November. The demand for labour among companies has gradually picked up. Due to continued pressure on prices and costs, however, businesses are only cautiously increasing their headcounts. Employment growth is therefore likely to remain moderate. Given the supportive global environment and favourable monetary conditions, the recovery in the Swiss economy looks set to continue in the coming months. For 2018, we expect GDP growth of around 2%, following 1% in 2017. Compared to the current year, 2018 should be characterised by stronger growth stimuli mainly from exports and corporate investment. Inflation expectations, interest rates and exchange rates  I will now review changes in inflation expectations and monetary conditions. Inflation expectations for Switzerland have remained practically unchanged over the past half year. Households and companies still expect low inflation of around 0.5% in the short term. In the longer term, expectations lie at approximately 1%.