No. 133, October

The KOF Business Situation Indicator declined noticeably in September (see G 6). Following stable figures for the business situation during the summer months of July and August, it then dropped again in September. The Swiss economy is facing a difficult environment and is running out of steam.

Labour market challenges are evolving as a result of digitalisation and technological change. The KOF Forecast Conference on 2 October discussed how workers can best be prepared for this change. Company boss Josef Maushart presented problems and challenges from the perspective of the Swiss machinery, electronics and metal industry.

The debate about gender discrimination on the labour market frequently centres on wage differentials. At the KOF Forecast Conference on 2 October, Professor of Sociology Ben Jann made a case for including social mechanisms and stereotypes in the discussion. In this guest contribution, he presents a number of pertinent research results.

With big central banks once again focussing on more expansive monetary policies, the Swiss National Bank is under pressure to act. In response, the Bank could further reduce the key interest rate or step up its foreign currency purchases – which may, however, lead to problems with the USA. KOF expects a cut in key interest rates.

In the second quarter 2019, global trade contracted by close to 3% (annualised) compared to the preceding quarter. The export-heavy German economy is particularly affected by restrained global demand and China’s economic slowdown. The economy is also flagging in Italy. Irrespective of these trends, the situation on the European labour market is improving.

The signals coming from the Swiss economy have deteriorated recently. Industry, for example, is reporting a decline in capacity utilisation. The international environment has also changed. Forecasts for the global economy have become less upbeat. Weaker international business activity and the recent appreciation of the Swiss franc will have consequences. KOF is therefore lowering its forecast for economic growth this year and next.