and financial situation developed since our assessment in march? global economic outlook global economic activity declined more sharply than expected in the first quarter of 2009, especially in europe and japan. however, recent financial and macroeconomic indicators have shown a few encouraging signs. stock exchange indices have started to edge up. oil prices, which had been falling since july 2008, have been rising again since march. risk premia in the money and capital markets have declined. in addition, the indices of business activity and household confidence has clearly turned upward again, even if they remain at historically low levels. the combined effect of all these developments leads us to modify our risk assessment but does not substantially affect our scenario for the global economy. we still believe that positive growth could set in within the us in the second half of the year and in europe at the beginning of next year. we continue to expect a modest global recovery, so that the considerable under - utilisation of production capacities will not be eliminated in the next few quarters. consequently, unemployment is likely to increase further in the developed countries as a whole. swiss economic outlook as expected, the swiss economic situation continued to deteriorate in the first months of the year. in the first quarter, gdp contracted by 3. 2 % in annualised terms. however, this figure obscures a much sharper drop in final demand. as in the preceding quarter, part of production was, in effect, absorbed by an increase in stocks. external demand again plummeted and the level of capacity utilisation fell substantially in the manufacturing sector. final domestic demand by private entities stagnated, and is most likely to weaken in the months ahead, since companies will reduce their equipment investment and household expenditure will be checked by growing uncertainty in the labour market. the number of individuals affected by short - time working was rising fast at the beginning of the year, and unemployment is increasing at a regular pace. this trend is likely to persist in the next few months since the leading indicators of labour demand are falling sharply. nevertheless, it is to be hoped that the signs of improvement observed abroad will be gradually transmitted to the swiss economy. from the second quarter, the decline in exports is likely to slow down. however, growth figures will probably remain negative over the next few quarters due to the weakening in domestic demand as well as the reduction of inventory levels. for 2009 as a whole, the swiss national bank ( snb ) continues to forecast a reduction in gdp of between 2. 5 %

now like to outline the outlook for the global economy and switzerland in more detail. i will then look at monetary and financial conditions and the snb ’ s monetary policy. in the first quarter, the growth of the global economy was weaker than expected, across the board. in many emerging markets, particularly china, economic activity lost strength. in the euro area, the recession continued, and in the us, the recovery remained hesitant. the only advanced economy to gain significant momentum was japan. however, in the quarters ahead, global growth is likely to firm up gradually. in the us, the recovery will be supported by the labour market and rising asset prices. in japan, the very expansionary economic policy is having an invigorating effect. due to the upturn in world trade and the improvement in financing conditions, the euro area is also likely to emerge gradually from recession. in addition, the burden imposed by budget consolidation will be lower next year. overall, however, the outlook remains uncertain. the risk of a deterioration in the global economy continues to be high. as before, the biggest risk remains a renewed deterioration in the euro area financial and sovereign debt crisis. even though our baseline scenario bis central bankers ’ speeches assumes a gradual solution of the crisis, it is possible that tensions could re - emerge on financial markets at any time. swiss economic outlook in switzerland, the economy experienced a temporary revival in the first quarter, as expected, and real gdp rose by 2. 3 %, in annualised terms. thus, we experienced more favourable growth than our neighbouring countries. the difference is primarily attributable to domestic demand. once again, growth was mainly driven by private consumption and investment in residential construction. these demand components benefited from the relatively robust labour market, a continued strong inflow of immigrants and the favourable financing conditions. in particular, the supply of credit in switzerland is currently having a much stronger effect on the real economy than in most european countries. in the case of exports, however, there are no indications of a lasting revival. since the beginning of 2011, real exports have been moving sideways. they are being held back not only by the high value of the swiss franc, but also by the subdued momentum in world trade. moreover, investment by swiss companies is hesitant. one reason for this is uncertainty about further developments in the global economy. however, further factors dampening investment activity are pressure on profit margins and the continued overcapacity in parts of the manufacturing industry.