No. 166, October

The KOF Business Situation Indicator recovered in September after suffering two consecutive declines. Although it rose slightly in September, it remains lower than it was in July. Firms still view their business situation as predominantly encouraging. Although the economy in Switzerland has cooled somewhat in recent months, companies continue to cope with this situation adequately.  

An economic stimulus package launched by the EU Commission is intended to revive Europe’s economy in the wake of the COVID-19 pandemic and, at the same time, modernise its infrastructure. But acute problems in the construction market as well as local planning restrictions could reduce the programme’s impact.

In August, KOF and the Neue Zürcher Zeitung (NZZ) newspaper surveyed economists at Swiss universities on the country’s pension system and the vote on the 'AHV 21' reforms. A majority of the 133 respondents would be in favour of the minimum conversion rate in the second pillar and the statutory retirement age following a rule-based automatic mechanism instead of the two parameters only being able to be adjusted by law.  

Central banks in Switzerland, the euro area and the United States are raising interest rates swiftly. In the long term, however, KOF expects to see lower rates return.

Inflation in Switzerland, the euro area and the US is at historic extremes; the upward trend in prices is gaining breadth.