IMF adverts Switzerland for next slowdown economy

The Swiss National Bank has less room to manoeuvre in tackling inflation and deflation in Switzerland, the International Monetary Fund said on Monday after forecasting a slowdown in the Swiss economy.

Switzerland’s economic growth is expected to slow to 1.1 percent in 2019 before a “moderate” recovery in 2020, the IMF said.

The figures compared with the latest government forecast for a 1.1 percent expansion this year and 1.7 percent for 2020. This would be a slowdown from 2.5 percent growth in 2018.

The IMF said the Swiss National Bank had been successful in tackling currency fluctuations and stabilising inflation in a tough environment.

But the organisation said the central bank had only limited scope for monetary policy in an environment of low interest rates abroad and the attraction of the Swiss franc as a safe-haven investment.

The franc has soared to its highest level against the euro since July 2017 due to concerns about slowing global growth, making life tough for Switzerland’s export-reliant economy.

“Continuation of accommodative policies by major central banks could constrain the flexibility of Swiss monetary policy,” the IMF said, adding the SNB had “somewhat less room than in the past” to meet its price stability goal.

“If needed, moving further into negative interest territory remains feasible to address persistent low inflation,” the IMF report said.