Switzerland’s economic recovery has been broadly balanced despite the franc's strong appreciation, says the Organisation for Economic Co-operation and Development.
In its annual economic survey of the country, the OECD warned, however, that economic indicators pointed to a period of stagnation in the near term, particularly in manufacturing.
This was related to decelerating activity in trading partners and the appreciation of the Swiss franc, it said on Tuesday.
While noting that the strong franc was a threat to the export sector in this time of recovery from the world economic downturn, the OECD said that weakening price competiveness was “more than compensated for” by strong international demand for Swiss goods and services, particularly from emerging East Asian countries.
The OECD added that monetary policy should remain expansionary and fiscal policy should remain prudent.
It said that given the speed and amount by which the Swiss franc had appreciated in 2011, intervention measures by the Swiss National Bank – which has introduced a floor of SFr1.20 to the euro – “was appropriate to fulfil its mandate to maintain price stability”.
The report also recommended tax reform to leverage wealth and increase growth and highlighted how the planned reform of the regulation of the country’s two biggest banks – UBS and Credit Suisse – should reduce the risk for taxpayers and the economy.
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