Switzerland: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Switzerland

IMF Staff Country Reports, June 7, 2023

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Canonical URL: Switzerland: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Switzerland

Growth slowed in 2022, while inflation became a new challenge after a decade of ultra-low or negative inflation.
Growth is expected to slow further in 2023—driven by the weak global outlook, tighter monetary policy, and cooling of pent-up demand, before recovering to medium-term potential in 2024.
Risks are tilted to the downside, with high uncertainty.

Scenario 1: An abrupt, synchronized global slowdown could take place at the same time as prolonged high inflation in advanced economies, due to monetary policy miscalibration.
Scenario 2: (Implied) A less adverse global path allowing recovery to medium-term potential in 2024, conditional on external and domestic developments.

Climate and energy
- Passage and implementation of the revised CO2 Law are critical to achieving climate targets.
- Additional measures are needed to ensure secure energy supply.
Labor market
- Efforts to ease the tight labor market should continue.
Monetary and exchange rate policy
- The response to higher inflation has been appropriate and should remain data driven, including further rate hikes if needed.
- If facing depreciation pressures, the Swiss National Bank (SNB) could continue to reduce foreign exchange (FX) holdings.
- The SNB should refrain from FX investments to curb appreciation unless due to excessive market volatility.

Subjects: Central bank policy rate, Credit, Financial services, Financial statements, Inflation, International organization, Monetary policy, Money, National accounts, Prices, Public financial management (PFM)
Keywords: AML ordinance, banking stress test model, Central bank policy rate, Credit, draft legislation, Financial statements, FSI website, Global, IMF of the exchange restriction, IMF's transparency policy, Inflation, investment strategy, SNB balance sheet, SNB data, Switzerland well, Switzerland's GDP, well-functioning of financial markets