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The Swiss Franc Shock Increases Uncertainty And Reduces Confidence In Switzerland

On Friday, February 5, 2015, Switzerland's State Secretariat for Economic Affairs ((SECO)) produced two news releases related to the Swiss franc shock. They both describe the increase in economic uncertainty and decrease in confidence in Switzerland in the wake of the sudden appreciation of the Swiss franc.

SECO explains that the Federal Government's Expert Group acknowledges that sudden strength in the Swiss franc (FXF) has rendered its previous economic forecasts for 2015 and 2016 invalid. A comprehensive update will come during the next regularly scheduled release in March. The rapid surge of strength in the Swiss franc has generated "a significant loss of price competitiveness" for Switzerland's manufacturing companies and increased their level of uncertainty. This uncertainty is hampering planning and as a result impacting investments and production. Ultimately, the impact on GDP will closely depend upon the duration of the Swiss franc's extra strength (very uncertain) and how… Read More …