Negative trend continues: Financial analysts expect weak economic development

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The CS-CFA indicator, released on Wednesday, rose only slightly from -32.2 points to -30.8 points in June. In March, the index decreased to -41.3 points due to the turbulence in the banking sector.

Swiss financial analysts’ sentiment barometer has been below zero for the sixteenth consecutive month, pointing to more than a year of economic downturn. As a result, according to the research, 70 percent of the participants evaluate the current situation as “normal”, and even 30 percent as “good”.

Meanwhile, analysts’ inflation expectations are rising again. Meanwhile, 21 percent of experts expect inflation rates to rise in Switzerland in the next six months. However, the trend remains bearish for the US and the euro area.

The reason for this development may be the upcoming rent increases since October after the most recent increase in the reference interest rate. This should push inflation up in Switzerland, at least for a short time. However, three- to five-year long-term inflation expectations haven’t changed much – with a 60 percent probability, inflation will then be within the Swiss National Bank SBN’s target corridor of 0 to 2 percent.

Meanwhile, there was no change in the growth assessment. Despite significant fluctuations during the pandemic, just over half of analysts still expect the Swiss GDP growth rate to be 1 to 2 percent in three to five years.

When it comes to interest rates, even after previous increases, survey respondents assume that rate hikes are not over yet. 62 percent of experts expect at least one more rate hike in the coming months. But so far, the effects on the real economy have been limited – the mood barometer has already dropped due to the consequences of the Ukrainian war. Moreover, respondents do not expect a noticeable impact on the labor market.

According to the information obtained, 52 analysts participated in the survey held between 15-22 June.

(SDA)

Source :Blick