Financial market and macroeconomic indicators
First signs of gentle economic recovery emerging
The experts surveyed for the Swiss Banking Outlook forecast economic growth of 1.2% and an inflation rate of 1.3% for this year, followed by economic growth of 1.5% and a stable inflation rate of 1.1% in 2025.
The financial experts foresee a 1.2% increase in real Swiss gross domestic product (GDP) this year, which is roughly in line with last year’s rise. Just over a quarter of respondents share this view. A further quarter expect growth to be 1.0% or less, while the remaining 50% expect it to be higher than 1.2%. They are slightly more optimistic with regard to 2025, anticipating economic growth of 1.5%. Some 80% forecast a GDP increase in the 1.5-1.7% range.
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In the respondents’ view, the inflation rate for 2024 will be 1.3%. Three quarters expect it to be between 1.3% and 1.6% for the year. The consensus figure for next year is slightly lower at 1.1%. As regards the labour market, the demise of Credit Suisse is unlikely to affect unemployment in the shorter term. The experts surveyed expect the rate to hold steady at 2.3% in 2024 and 2025, with individual estimates ranging from 2% to 2.5%.
The experts do not believe that the SNB’s most recent rate cuts from 1.75% to 1.25% at the end of June 2024 will be the last. The banking industry anticipates a further SNB policy rate cut by the end of the year, with just under three quarters of the experts surveyed forecasting a rate of 1.0% by the end of 2024 and slightly less than a quarter seeing it unchanged until then. The downtrend in the SNB policy rate is likely to continue in 2025: 60% of experts surveyed expect a policy rate of 1.0% for next year, while a quarter even expect it to fall to 0.75%. Some 40% see a downside risk attached to their forecasts for this year and the next. The experts surveyed see the yield on ten-year government bonds reaching 0.7% by the end of the year and staying relatively constant at this level, rising only slightly to 0.8% by mid-2025. This forecast is a reflection of the stable inflation expectations. However, it is fraught with uncertainty. Only just under half of those surveyed see their forecast as neutral. The rest are split fairly evenly between upside and downside risks. In terms of exchange rates, continuity is expected. The Swiss franc is seen firming slightly against both the euro and the US dollar. A substantial share of respondents, meanwhile, think that deviations from the forecast are more likely on the upside, i.e. an even stronger Swiss franc.
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The respondents take a positive view of the stock market trend, predicting a level of 12,470 points for the Swiss Market Index (SMI) at the end of the year, which equates to a 13% gain across 2024 as a whole. The individual forecasts range from 12,100 points (+8.5%) to 12,800 (+14.9%). However, the experts anticipate higher volatility. The positive trend in share prices is likely to continue into next year but will probably lose some momentum. The survey predicts a gain of 3% to 12,850 points by the end of 2025. The SMI has added 4.5% a year on average since 2017.