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June 16, 2022
Press release
purchasing power. On the other hand, it is explained by the uncertainty resulting from the war in Ukraine and the containment measures imposed in China due to Covid-19.
Since March, inflation has risen sharply again on a broad front in many countries. The war in Ukraine plays a central role here too, driving up the prices of many raw materials. In addition, the persistent supply difficulties led to further price increases for various goods.
In its baseline scenario for the global economy, the SNB assumes that energy prices will initially remain high, but that there will be no severe energy shortages in major economic areas. . The positive trend in the economy should therefore continue overall. Inflation is expected to remain high for some time following rising energy and food prices and supply difficulties. However, these factors should fade in the medium term. Also under the influence of the ever more marked tightening of monetary policy in many regions, inflation should gradually return to more moderate levels.
There are significant risks hanging over this scenario for the global economy. Thus, inflation could continue to increase and weigh even more on real incomes and consumption. At the same time, a strengthening of second-round effects could prolong the phase of high inflation, which would require stronger monetary policy responses abroad. Finally, the war in Ukraine and the pandemic continue to pose significant downside risks to growth.
In Switzerland, the favorable development of the economy has continued since the beginning of the year. After modest growth in the fourth quarter of 2021, gross domestic product (GDP) grew by almost 2% in the first quarter of this year. For the current quarter, the signals remain positive. The situation on the labor market also continued to improve.
The war in Ukraine has so far had relatively little impact on economic activity in Switzerland. The most visible consequences are the increase in energy prices and supply difficulties.
The National Bank still expects GDP growth of around 2.5% for 2022. Unemployment is expected to remain low. This favorable forecast is based in particular on the assumption that the world economy will continue to grow and that the war in Ukraine will not worsen.
As for abroad, significant risks weigh on the forecasts for Switzerland. A disruption of the energy supply in Europe could significantly affect the economy of our country. Global supply difficulties and further increases in commodity prices could also dampen growth. In addition, a resurgence of the Covid-19 pandemic cannot be ruled out.
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