Switzerland: 2024 Article IV Consultation-Press Release; Staff Report; Informational Annex; and Statement by the Executive Director for Switzerland

IMF Staff Country Reports, June 24, 2024

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Canonical URL: Switzerland: 2024 Article IV Consultation-Press Release; Staff Report; Informational Annex; and Statement by the Executive Director for Switzerland

Growth is recovering gradually after slowing in 2023.
Inflation risks: concern about inflation moving to and settling at very low rates; the rate cut ahead of other central banks was appropriate to counter these risks.
Monetary policy should remain responsive to incoming data while taking into account international monetary policy developments.

Policy assessment: the earlier rate cut relative to other central banks was judged appropriate to reduce the risk of inflation settling at very low rates.
Recommendation: keep monetary policy responsive to incoming data and monitor international monetary policy developments for spillovers.

Banks: strong buffers.
Persisting vulnerabilities: risks related to real estate remain.
Recommendations:
- Maintain ample capital buffers.
- Expand the macroprudential toolkit.
- Close data gaps relevant to financial stability.

Reform priorities:
- Promote labor market and pension reforms to incentivize labor force participation of women, older workers, and immigrants.
- Address labor shortages and skills gaps.
- Address potential fiscal imbalances linked to demographic and pension system pressures.

The revised CO2 Act:
- Clarifies the policy framework for 2025–2030.
- Is less ambitious than initially proposed.
- Might require acquiring more emissions-reduction credits internationally.

Recommendation: advance negotiations with the EU and enhance cooperation with other key partners.
Rationale: mitigating uncertainty and strengthening resilience against geo-economic fragmentation risks.

Subjects: Anti-money laundering and combating the financing of terrorism (AML/CFT), Crime, Expenditure, Financial sector policy and analysis, Financial sector stability, Inflation, Labor, Labor markets, Prices
Keywords: Anti-money laundering and combating the financing of terrorism (AML/CFT), banking stress test model, climate policy framework, Financial sector stability, financial system stability assessment update, Global, IMF of exchange restriction, Inflation, Labor markets, policy stance, SNB data portal