Macroeconomic News Flash

Quarterly Economic Environment and Outlook

Basel, Q3-2021 (July 2021)


Growth in Switzerland will continue to recover in the second half of 2021. A growing external demand will have a positive impact on the economy. But German manufacturing remains under pressure with a negative effect across Europe and Switzerland. The Swiss Franc is still a concern, the central bank continues to in-crease its policy support, also trying to mitigate the effects of a strong currency. The main issue, the corona-virus pandemic across the world, is shattering confidence but the success of vaccine roll-outs in much of the rich world is helping to improve prospects.


The US economy will continue to improve and gain pace. Consumption is stabilising, the labour market conditions are healthier and the service sector is accelerating. House prices are stable, residential investment is rebounding. Interest rates will remain very low, growth forecasts are more optimistic. The corporate sector is improving. But hesitant growth in Europe and the world could hurt export-oriented companies. The economic scenario is more encouraging now, the combined weight of emergency fiscal and monetary measures, the Covid relief bill and government funding plan should alleviate economic pain and allow the sustained rebound to continue in the second-half 2021.


Industrial production is recovering slowly. Growth rates are improving, most countries are still challenged by public debt financing. In Germany, the industry is robust but the service sector is weak. Manufacturing companies are planning to reduce their work force. Exports and services decline in France, Italy, and Spain raises intense pressure on the governments to continue to add fiscal stimulus. The ECB has made clear its willingness to act without limits, the era of quantitative easing will go on for a long time. Interest rates will remain at very low levels. In the UK, the Bank of England put a new monetary strategy to finance the country’s response to the pandemic. The Chancellor is implementing a wave of new measures following the definitive break-up from Europe.


The government in Japan is pushing for more growth and the central bank, with its negative interest rate policy, has pledged to expand asset purchases, buying bonds and treasury bills. The public debt is already very high. The economy is stalling, private consumption and public investment weaker. Exports are strong but a less competitive yen increases corporate pessimism. In China, exports growth is better than expected. The economy and domestic demand remain under strong pressure. In India, the government continues to implement policy changes designed to improve growth. Escalation of Covid-19 infections will have an impact on the road to recovery.


CHFStable, due to its role as a safe haven currency. The SNB will continue to sell Swiss francs to avoid a further appreciation.
JPYTo remain stable, likely to soften again if there is bank intervention.
GoldFirm, even with a stable dollar.

Financial Markets

Interest Rateslowlowlowlowlow
Stock Marketsvolatilevolatilevolatilevolatilevolatile

The aforementioned Economic Environment and Outlook shall not constitute a recommendation or an investment advice. It is not the result of any financial analysis and the “Directives on the Independence of Financial Research” issued by Swiss Bankers Association does therefore not apply.