IMF Praises Swiss Economic Management, Moots Further Rate Cuts

by Ulrika Lomas, Tax-News.com, Brussels

23 May 2001

The International Monetary Fund released a report on Switzerland yesterday saying that growth would decline to 2% in 2001 after last year's 3.4% gain.

The IMF says that even this reduced growth forecast could be optimistic, because it “views the growth projection as subject to downside risks from the weakening global economy”, and says that there is scope for interest rate cuts by the Swiss National Bank if the economy shows a more marked slowdown.

The Washington-based IMF says that Swiss inflation “remains subdued”, forecasting just 1.4% in 2001. The organisation welcomed Switzerland’s recent interest rate cut, taking into account the country’s low inflation, its strong external current account and the improved performance of the Swiss franc.

The Swiss National Bank left interest rates unchanged earlier this month after easing them in March, but traders expect a further easing, possibly as early as next month.

The IMF praised the Swiss authorities for maintaining sound macro-economic policies, which it said had helped create a strong economic recovery and lower unemployment without sparking inflation.

“Looking forward, directors considered that the main challenge is to pursue more vigorously the structural reforms that are needed to improve Switzerland’s long-term growth prospects,” the IMF said.

The full report is available in Tax-News.com Resources: click here.

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