Macroeconomic News Flash

Quarterly Economic Environment and Outlook

Basel, Q3-2020 (July 2020)


Growth in Switzerland will start to recover in the second half of 2020. A weak external demand will continue to have a very negative impact on the economy. German manufacturing remains under pressure with a bad effect across Europe and Switzerland. The Swiss franc remains a concern, the central bank is trying to mitigate the effects of a strong currency. The main issue is the coronavirus pandemic across the world.


The US economy will rise sharply in the third quarter of 2020. Consumption is stabilising, the labour market conditions are improving very fast, savings rate are 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 but earnings are expected to improve. A contraction of 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 should alleviate economic pain and allow a sustained rebound towards the year-end.


Industrial production is falling. 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 raise 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 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.
USDVolatile, could weaken.
EUROVolatile, could rise.
JPYTo remain stable, likely to soften again if there is bank intervention.
Gold• Firm, 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.