(06 SEPTEMBER 2018)DAILY MARKET BRIEF 2:Swiss economy robust, but threats loom

Switzerland’s economy is on the rise and appears unaffected by geopolitics. GDP is up 3.4% annually, a pace not seen in the last 8 years! The quarterly GDP advance of 0.7% remains above average (0.4%) for the fifth consecutive time. Key contributors are manufacturing and energy, which benefited from exports and a favourable exchange rate. The CHF has depreciated against the Euro, from 1.09 in September 2015 to 1.13 now, a boost for Switzerland’s export-oriented businesses.

However, the trend is turning. Risks include Turkey’s plunging lira, Italy’s budget deficit and US duties on EU auto imports. The Swiss National Bank expects GDP growth to slow to 2% by the end of the year (still, a rate not seen since 2014). With solid growth and a strong franc, the SNB is not expected to raise interest rates any time soon. Currently trading along 1.1282. EUR/CHF is declining further, heading to 1.1265 in the short-term