Macroeconomic News Flash

Quarterly Economic Environment and Outlook

Basel, Q1-2021 (January 2021)


Growth in Switzerland will continue to recover in the first half of 2021. A weak external demand will have a negative impact on the economy. German manufacturing is under pressure with a bad effect across Europe and Switzerland. The Swiss franc remains a concern, the central bank continues to increase its policy support, also trying to mitigate the effects of a strong currency. The main issue remains the coronavirus pandemic across the world.


The US economy will continue to improve and will gain pace. Consumption is stabilising, the labour market conditions are improving, saving rate is strong. House prices are stable but residential investment will contract. Short-term rates will remain very low, growth forecasts are less pessimistic. The corporate sector is under pressure. Weak growth in Europe and the world will 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 a sustained rebound in 2021.


Industrial production is recovering slowly. Growth rates will decline, most countries are still challenged by public debt financing. In Germany, the employment barometer has fallen by a record amount and manufacturing companies are planning to reduce workers. 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 will implement a wave of new measures following the announcement of a Brexit trade deal with the EU.


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. A strong 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 new government continues to implement policy changes designed to improve growth.


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, benefiting from a weak dollar and continuing economic and geo-political uncertainties.

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.