IMF says Swiss Franc overvalued

IMF  has the following to note in regard to Switzerland. (Concluding Statement of the 2015 Article IV Mission March 23, 2015)

Economic growth in Switzerland is likely to slow in the near term while inflation becomes more negative.

Exchange rate appreciation in early 2015 has left the Swiss franc overvalued and weakened the near-term outlook.

GDP growth is expected to ease to around ¾ percent in 2015, mainly due to weaker net exports.

The strong franc, together with lower oil prices, is also likely to drive inflation down to around -1½ percent by late 2015.

Specific risks include the following:

• Risks related to low inflation.  

• Uncertainty about EU relations and immigration.

• Global economic environment.

 the level of mortgage debt is still high and growing .  

  

• Need for increasing banks’ disclosure requirements regarding capital-weights to enhance transparency and bolster understanding of, and credibility in, banks’ soundness and business strategies.

• Continue to monitor closely the possible effects on the financial sector of the recent exchange rate appreciation and low interest-rate environment. The second factor is particularly important for life insurers and defined-benefit pension plans. To ensure the sustainability of the latter, the minimum rate of return (currently 1¾ percent) that applies to some plans and that is established by the government should be reduced to bring it into line with market rates.

Without any risk or responsibility