No. 159, February

KOF economist Alexander Rathke talks about rising prices in the United States and Europe, the special case of Switzerland and the challenges of monetary policy over the coming years.

The KOF Business Situation Indicator rose slightly again in January. The Swiss economy’s recovery is thus continuing at the beginning of the new year. The outlook for business in the near future remains predominantly positive. However, it has been dampened and is no longer as encouraging as it was at the end of last year.

KOF has used so-called web-scraping and text-mining methods to investigate the effects of the COVID-19 pandemic on Swiss companies. Among other things, this study comes to the conclusion that production problems occurred mainly at small and medium-sized firms during the first wave of coronavirus, while larger companies were more seriously affected during the second wave.

Intermediate products such as semiconductors and some raw materials are currently highly in demand among firms. Strong consumer demand for end-products and the resulting high levels of output, as well as friction in the supply and transportation of intermediate products, are causing the latter to become scarce and more expensive. In addition, however, companies’ strong orders of intermediate products could exacerbate this shortage. There are certain indications of this in Switzerland.