Economic growth is expected to pick up steadily as external demand starts supplementing domestic spending. Exit from deflation is proving protracted as a strong Swiss franc and only a slow take-up of economic slack are both holding down price pressures. Despite employment gains, unemployment is not projected to fall significantly until 2015.
In light of this outlook, zero policy interest rates are set to persist in the near term. However, as inflation eventually picks up monetary policy will need to be gradually normalised by raising interest rates and ending the exchange rate ceiling. Productivity could be enhanced at modest fiscal cost by improving some kinds of infrastructure and increasing the supply and cutting the cost of childcare services.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.