exporters. since the onset of the financial crisis, the swiss franc has appreciated in real terms by around 15 %. 18 this appreciation puts up the price of swiss exports abroad or narrows the margins for swiss exporters – or a combination of both. this will be reflected sooner or later in the export figures. indeed, in recent months, the recovery of swiss goods exports has slowed markedly ; although this is also related to a slowdown in global economic momentum. the financial crisis and financial market concerns regarding the public finances of a number of industrialised countries have increased demand for the swiss franc as a safe haven currency. the stability of the euro area is therefore an important factor influencing the swiss franc and the swiss economy as a whole. eu citizens clearly have a vested interest in the stability of the euro. the same is very much true for the citizens of switzerland. i am confident that the eu will ultimately succeed in once again deeply anchoring a culture of economic and financial stability. earlier this year, european politicians and policymakers began to take decisive action to that end. as we all know, crucial challenges lie ahead. these call for determination, courage and perseverance – not only from policy makers, but also – and most importantly – from the citizens of the eu. i am confident that the eu and the euro area will overcome these challenges. in the past, europe has always emerged stronger from periods of difficulty. jean monnet already recognised this in 1976, when he wrote in his memoirs : “ europe will be forged in crises and it will be the sum of the solutions adopted for those crises. ” 19 as far as switzerland is concerned, i am optimistic that it, too, will overcome the formidable challenges it faces. as with most countries, switzerland benefited greatly from globalisation and from opening up its economy. thanks to its flexibility and creativity, the swiss economy is well placed to remain internationally competitive. but the swiss people must recognise that the world does not stand still. in order to preserve and enhance our high standard of living, we must remain extremely flexible in every respect. this is where the real economy, in particular, faces a challenge : ongoing innovation and qualified human capital are of the utmost importance in a high - wage country such as switzerland. both of these factors will enable our companies to continue to bring successful new products onto the world market, many of which we aren ’ t even able to imagine today. monetary policy can generate neither innovation nor growth. nonetheless, the swiss

swiss economy is still not fully utilised overall. technical capacity utilisation in manufacturing remains considerably below its long - term average. although employment was up in the first quarter, the unemployment rate remained unchanged. we expect the moderate recovery to continue in the coming quarters. for 2014, we anticipate that the growth rate will remain at around 2. 0 %. as we continue to see gradual improvement in the international environment, export demand is likely to rise. over time, this should encourage corporate investment and stimulate demand for labour. the level of residential construction orders remains high. on the whole, however, we expect a considerable slowdown in the growth momentum of residential construction investment. in addition to global risks, the swiss economy also faces uncertainty at home. in the past few weeks, the snb ’ s delegates for regional economic relations asked companies to assess the impact of the popular initiative on curbing mass immigration on their business activity. the results suggest a tangible level of uncertainty about economic conditions. most companies have not taken any specific measures, however. monetary and financial conditions i will now turn to monetary and financial conditions. after about two years of negative inflation, consumer price inflation has been practically zero for some months now. this very restrained development is also reflected in inflation expectations. the majority of market participants expect inflation to remain unchanged in the short term. over a longer horizon of more than two years, the relevant surveys show that the expected rate of inflation is approximately 1. 0 %. these results are consistent with our assessment of the inflation outlook. bis central bankers ’ speeches geopolitical risks and mixed economic data in the major economies led to stronger demand for secure investments. this was reflected in falling yields on long - term government bonds. my colleague, fritz zurbrugg, will talk to you about developments in the financial markets in more detail. mortgage rates also declined again, thereby further bolstering demand for mortgage loans. however, the slowdown of momentum in mortgage lending, which has been observed for some time now, continued. this is a step in the right direction. nevertheless, imbalances remain. it is therefore still too early for an all - clear. given the high level of liquidity, money market rates remained at a low level. even prior to the introduction of negative interest rates by the european central bank ( ecb ), swiss franc libor futures slipped well into negative territory. we are closely monitoring the impact of the recent interest rate reductions in the euro area