Economic survey by Credit Suisse in cooperation with the Centre for European Economic Research (ZEW)

Economic expectations have diminished diminish marginally. Indicator dipped by 2.4 points to the 54.0 mark. At the same time, the assessment of the prevailing economic picture brightened up a little, with the corresponding indicator climbing by 3.3 points to the -42.9 level. The lion's share (74.0%) of financial market experts surveyed continues to anticipate that short-term interest rates will hold steady on a six-month horizon.

The balance for interest rate expectations increased marginally in December, reaching the 22.0 threshold. Meanwhile, the balance for inflation expectations declined by 7.4 points and now stands at 32.6. The December survey results reveal that 59.2% of respondents expect inflation to rise in the coming six months.

According to the results of the latest survey conducted in conjunction with the Financial Market Test Switzerland, economic expectations edged down slightly in December for the second consecutive month. The relevant Credit Suisse ZEW Indicator for economic expectations declined by 2.4 points, but continued to hover at a high level of 54.0. Hence, the overriding majority (64.0%) of financial market experts surveyed have maintained a basically positive stance regarding the economic trend in the coming six months.

The assessment of the prevailing economic picture brightened up a little again in December, with the proportion of analysts who view the present environment in a "bad" light shrinking further by 5.8 percentage points to 42.9%. The corresponding balance of indicators for the current economic situation improved by 3.3 points compared with the previous month, reaching the -42.9 level.

Most (74.0%) of the financial market specialists still predict that short-term interest rates will hold steady. However, the share of respondents who anticipate that rates will increase within the next six months grew by a modest 1.5 percentage points to 24.0%. The relevant balance edged up by 2.0 points to the 22.0 mark. The majority (75.0%, down 7.0 percentage points) of participants expect no change in the interest rate differential between Switzerland and the Eurozone. The pertinent balance fell by 6.8 points to the -4.2 level.

Regarding the Swiss stock market, sentiment among the financial analysts has improved, with 61.2% (up 5.9 percentage points) of the experts forecasting that the Swiss Market Index (SMI) will gain terrain on a six-month horizon. On the other hand, 18.4% of the respondents believe that the SMI will lose ground down the road. The relevant balance climbed by 11.2 points to the 42.8 plateau in December.

Precisely 62.0% of the analysts foresee no significant change in the EUR/CHF currency pair in the coming six months, while 24.0% (up 6.5 percentage points) see the Swiss franc picking up territory against euro. The corresponding balance increased by 10 points to the 10 mark.

The share of experts who forecast that oil prices will rise in the next half-year sank from 55.0% to 47.9% in December. At the same time, 14.6% of the respondents (up 9.6 percentage points) now predict that the price of oil will decline. The relevant balance therefore decreased by 16.7 points and stands at 33.3. Turning to the trend in gold prices, 38.3% of the participants (down 6.4 percentage points) think that the price of the precious metal will increase further. Consequently, the balance now resides at the 10.6 mark, corresponding to a drop of 15.7 points.

Expectations regarding the corporate earnings situation and profit margins in Switzerland improved again in the December survey. Meanwhile, a noticeably reduced proportion of experts (67.3%, down 17.7 percentage points) anticipate that the Swiss unemployment rate will continue to climb in a six-month timeframe.

The survey process and methodology
The ZEW has conducted a similar monthly survey for Germany since 1991. The aim of the Swiss survey is to develop indicators both for Switzerland's general economic climate as well as for the Swiss services sector.

Specifically, survey participants are asked to give their m

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