Economic Expectations Continue to Diminish

Once again the ZEW-CS-Indicator of Economic Sentiment for Switzerland diminishes considerably in June. The relevant ZEWCS- Indicator lost ground by 23.0 points and is now hovering at the 17.5 mark. After a stable phase since September 2009, the Indicator has now deteriorated considerably for the second consecutive month. This is revealed by the current Financial Market Test Switzerland, carried out monthly by the Centre for European Economic Research (ZEW) in cooperation with Credit Suisse (CS).

In contrast, the assessment of the current economic situation improves by 12.7 points and continues to waver in positive territory already for the third consecutive month at the 17.5 level.

Inflation expectations over the forecast horizon of six months diminish once again. Only 12.5 percent of the survey participants predict that inflation will rise within this timeframe, in contrast to 77.5 percent who foresee an unchanged inflation rate. Overall, the balance of inflation expectations decreases by 16.6 points to reach the 2.5 threshold.

Expectations for short-term interest rates change just very slightly in June. The overriding majority of 82.5 percent of respondents continues to see interest rate levels holding steady. The relevant balance for interest rate expectations remains virtually unchanged in June, at the 12.5 mark (up 0.6 percentage points).

With respect to the Swiss stock market there can be registered a cautious optimism among the financial market experts. A total of 66.7 percent of survey participants presume that the Swiss Market Index (SMI) will gain terrain down the road. Consequently, the respective balance recouped from the setback suffered the previous month, increasing from 40.0 to 53.9 points.

Detailed results

More detailed results - including survey participants' assessment of developments in other countries - can be found in this month's edition of the "Switzerland Financial market report" (please note that the URL is case sensitive):
https://marketdataresearch.credit-suisse.com/cs/mdr/p/d/qrr/oneCMScontent/doc/pdf/zew_en_201006.pdf