Filtered by Subscriptions: Nordic & Swiss Economics Use setting Nordic & Swiss Economics
This morning’s 25bp rate cut by the Norges Bank, to a fresh record low of zero, took the consensus by surprise, but was in line with our forecast. That said, the Bank gave a strong signal that it has now reached the end of string of rate cuts, and we now …
7th May 2020
Q1 data underplay scale of economic disruption in Sweden The comparatively small fall in Swedish GDP in Q1 appears to owe as much to a strong January and February as Sweden’s lighter-touch lockdown. Accordingly, today’s data underplay the scale of the …
5th May 2020
Sweden’s light-touch lockdown offers limited solace for industry While Sweden’s less stringent lockdown has received a lot of attention, today’s data add to the evidence that economic activity there has not fared much better than elsewhere in Europe. The …
4th May 2020
KOF Barometer is feeling under the weather The unprecedented scale of the Covid-related economic carnage has seen previously reliable relationships between business surveys and output break down in many countries, and Switzerland is no exception. While …
1st May 2020
Given the toxic combination of Covid-related disruption and precipitous plunge in oil prices, we think that the Norges Bank’s easing cycle has further to run. Whereas financial markets are pricing in only a small chance of further loosening, we have …
Barometer underplays scale of economic damage Despite registering its largest monthly fall on record in April, the KOF Economic Barometer appears to underplay the havoc that has been wreaked on the Swiss economy. While the government has begun to ease the …
30th April 2020
This morning’s decision by the Riksbank to leave its repo rate and crisis-related policy settings unchanged did not come as a big surprise. Nonetheless, it kept the door open for a rate cut, and we think that a return to negative interest rates is likely …
28th April 2020
Despite imposing less draconian measures than elsewhere, the economic impact of Sweden’s ‘lockdown’ is not far short of that in France, for example. Accordingly, Sweden’s experience pours cold water on hopes that lifting restrictions in other countries …
24th April 2020
Norwegian economy sideswiped by Covid-19 Statistics Norway took the award for this week’s most irrelevant data release, with the unemployment rate from way back in February, but it more than made amends with the ahead-of-schedule publication of its Q1 GDP …
Having pulled out all the stops since its last scheduled policy meeting, in February, we suspect that the Riksbank will take stock next week. However, as the focus shifts away from monetary firefighting, we think that the Bank will return to negative …
23rd April 2020
Low levels of government debt mean that Switzerland and the Nordic economies are comparatively well placed to withstand the acute stresses being placed on the public finances – particularly compared to the euro-zone. That said, output everywhere will take …
21st April 2020
Switzerland announces its exit plan In the week when Danish children under 11 returned to school, Switzerland announced yesterday that it too will start to ease its containment measures from 27 th April. Its three-phase plan foresees allowing small …
17th April 2020
Core inflation set to fall even further below target While the decline in headline inflation in Sweden in March owed much to lower energy prices, persistently below-target core price pressures and the virus-related economic slump opens the door to further …
15th April 2020
Norwegian economic activity falls off a fjord The release of February GDP data from Norway on Tuesday showed that the mainland economy was far from a picture of health even before the ramp-up in containment measures in mid-March. Measured in 3m/3m terms, …
9th April 2020
The scale of the economic damage in Switzerland and the Nordics following the imposition of draconian virus-related containment measures is becoming all too apparent. Business surveys have plunged across the board, and the statistical agency in Norway …
8th April 2020
Rising chance of further Norges Bank rate cuts While core inflation in Norway remained slightly above policymakers’ target in March, the precipitous plunge in economic activity raises the chance that Norway will join the sub-zero interest rate club. The …
The fact that almost one-third of the Swiss workforce has reportedly applied for short-time work is a sobering illustration of the scale of the virus-related economic disruption. While the headline Swiss unemployment rate remained below 3% in March, we …
7th April 2020
Sweden’s services PMI is even worse than it seems In ordinary times, the 9.5-pt fall in Sweden’s services PMI in March, from 56.4 to an 76-month low of 46.9, would be enough to make you choke on your filmjölk . After all, the monthly decline was the …
3rd April 2020
Inflation set to stay below zero throughout 2020 Having fallen further into negative territory in March, Swiss inflation is likely to remain below zero for the rest of 2020. This will strengthen policymakers’ resolve to prevent the franc from rising much …
2nd April 2020
The combination of virus-related disruption and a crunch in cash flows for energy firms means that the Norwegian economy is more exposed than most at present. And with oil prices likely to increase gradually at best later this year, the post-COVID …
1st April 2020
The start of a grim run of economic data The eye-watering declines in the manufacturing PMIs for March from Switzerland and the Nordics simply confirm that economic activity has dropped off a cliff following the introduction of containment measures. …
While the SNB clearly favours using FX interventions to weaken the franc at present, persistent concerns about the size of its balance sheet would make it reticent to step in on an ever-greater scale. With no easy choices, we think that, if push came to …
30th March 2020
Chunky month-on-month fall, but much worse is to come While the Swiss KOF Economic Barometer registered its biggest monthly decline in five years in March, the fact that many of the responses to the survey component of the indicator predated the …
Better late than never While it’s been a relatively quiet week on the monetary policy front by recent standards, there is still plenty worth recapping here. The regular weekly data-dump from the SNB early on Monday morning indicated that the Bank made its …
27th March 2020
Swedish economy set to contract in Q1, and much worse is to come The broad-based drop in Sweden’s Economic Tendency Indicator in March is consistent with the economy contracting by about 0.5-1.0% in Q1. Unfortunately, much worse is set to come in Q2. The …
26th March 2020
We think the unemployment rate in the euro-zone will surge to about 12% by the end of June, giving up seven years’ worth of gains in a matter of months. Much of this may prove temporary if the economy rebounds in the second half of the year, as we assume, …
24th March 2020
The slump in the prices of commodities has hit hard the currencies of the countries whose fortunes depend heavily on them. (See Chart 1.) But if we are right and commodity prices eventually recover as the coronavirus pandemic is brought under control, …
23rd March 2020
Norges Bank opens door to further rate cuts Harold Wilson famously said that a week is a long time in politics, and this week demonstrated that the same can be true for central banks. While policymakers everywhere have not exactly been sitting on their …
20th March 2020
While the Swiss National Bank left its key policy rate on hold at -0.75% this morning, it made all the right noises by making its exemptions to the banking sector from negative interest rates even more generous, and pledging to provide liquidity to the …
19th March 2020
Norges Bank and Riksbank are ruling nothing out After a bruising week for equities and the Norwegian krone, it is half-encouraging that the Nordic authorities are all singing off the same hymn sheet. Nonetheless, policymakers will not be able to prevent …
13th March 2020
While the widespread re-introduction of border controls in Europe does not seem likely at present, it is possible that more governments turn to them as part of a wider policy response against the coronavirus. Any negative impact on cross-border workers …
The spread of the coronavirus, and the related real-time economic and market disruption, means that a large swathe of hard and survey data released during the past month is old news. Consequently, this publication will now focus on fewer, timely and …
12th March 2020
Amid a raft of rate cuts by other G10 central banks, and the recent plunge in oil prices, we have pencilled in a 50bp rate cut at the Norges Bank’s meeting next Thursday. We expect policymakers to follow up with a further 50bp of cuts in Q2, and the krone …
11th March 2020
As it stands, we think that the direct impact of the coronavirus on the Swiss insurance industry is likely to be manageable. However, the indirect impact from lower-for-longer bond yields will only add to the structural headwinds that have affected …
10th March 2020
Against a backdrop of rising pressure on major central banks to loosen policy in response to coronavirus, we now forecast the Riksbank to cut its repo rate back into negative territory at its 28 th April decision, if not before. However, as in other …
9th March 2020
Pressure building on the SNB to cut rates While the 0.2% increase in Swiss GDP in Q4 2019 was in line with our forecast, attention has understandably moved on to the economic impact of the coronavirus and the coming policy response. There is little in the …
6th March 2020
Coronavirus to exacerbate downward pressure on Swiss inflation The return of deflation to Switzerland in February will only strengthen the policymakers’ resolve to prevent the franc from rising much further. Following yesterday’s emergency rate cut by the …
4th March 2020
The stronger-than-expected increase in Swiss GDP growth in Q4 provides a higher base for annual growth rates at the start of this year than we had previously assumed. Nonetheless, following the surge in coronavirus cases, we now expect the economy to …
3rd March 2020
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
Broad-based improvement in February, but the story has moved on The increases in the manufacturing PMIs in February in Switzerland and the Nordics suggest that conditions in the industrial sector were improving before the surge in coronavirus cases in …
Covid-19 dominates proceedings in Switzerland The geographic proximity of Switzerland to Italy has understandably raised fears about the potential spread of the coronavirus. With the number of confirmed cases in Switzerland up to 15 at the time of …
28th February 2020
Swedish economy will struggle to regain momentum The Swedish economy ended last year on the back foot, and a combination of the rising threat from the coronavirus, weak growth in the neighbouring euro-zone, and persistently below-target inflation lend …
The possibility of the Olympics and/or the European Football Championships being cancelled as a result of the coronavirus poses downside risks to headline Swiss GDP growth this year. Nonetheless, this will not trouble the SNB, whose focus will remain on …
27th February 2020
The outsized importance of cross-border commuters to the Swiss economy means that it is particularly vulnerable to any disruption to flows of people within Europe as a result of the coronavirus. Partly because of this, the chances of a rate cut by the SNB …
26th February 2020
Policymakers agree to disagree Having drawn criticism for its optimistic projections for interest rates in the past, the Riksbank is keen to show that it means business with its forecast to leave the repo rate unchanged over the coming years. However, …
21st February 2020
Industry ends 2019 on the back foot While pharmaceuticals output supported Swiss manufacturing again in Q4, conditions in the rest of the sector weakened at the end of last year. With the German industrial recession likely to drag on, and the coronavirus …
20th February 2020
Weaker-than expected inflation to test the Riksbank’s resolve The sharper-than-expected fall in Swedish inflation in January may test the Riksbank’s resolve to keep policy unchanged. With subdued GDP growth likely to weigh on underlying inflation this …
19th February 2020
While we suspect that the SNB has intervened to slow the rise of the franc in recent weeks, it has not prevented it from reaching a multi-year high against the euro. At the margin, an increased tolerance for a stronger currency argues against the Bank …
18th February 2020
Riksbank will need to ease policy soon It was no surprise that the Riksbank left its repo rate on hold at zero percent this week or that it continued to forecast rates staying there until 2022. However, we think that underlying growth and inflation will …
14th February 2020
The initial financial market reaction in Switzerland and the Nordics to the coronavirus followed the familiar pattern during times of uncertainty: the Swiss franc rose and Swiss bond yields tumbled on the back of safe-haven demand, while the Swedish krona …
13th February 2020
