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Economic growth is rising but will remain moderate as the global outlook remains subdued. The labour market has been resilient, and the recent modest unemployment increase should be reversed by 2018. Interest rates are projected to remain low, helping to revive domestic demand. Deflation is ending as the currency has stabilised. The huge current account surplus will persist.
Monetary policy settings are appropriate, but risks from a long period of negative policy rates are rising. Although less buoyant than earlier, the housing market merits continued vigilance. Uncertainties remain regarding the implementation of the immigration quota decided in the 2014 referendum, even though some progress is being made. The ongoing reforms to corporate taxes are welcome. The fiscal position remains solid with the surplus expected to be maintained.
The solid fiscal balance and the low government debt give significant room to boost high-quality spending, notably on public investment, which has been modest in recent years. Government bonds yields are negative up to 10-year maturities. Interest payments have been halved since 2005 to 0.6% of GDP. Projects that would raise productivity and green the economy should be prioritised. Expanding provisions for early childhood education and care would help ensure that growth is more inclusive.
Economic Survey of Switzerland (survey page)