Against this backdrop, we expect GDP growth of 2.5% to 3% for 2021. The recovery thus remains incomplete. Unemployment is likely to rise again, and production factors will remain underutilised for some time yet. The forecast for Switzerland, as for the global economy, is subject to high uncertainty. Monetary policy’s contribution to crisis management and outlook  Prices will decline this year as a result of the coronavirus pandemic, and economic output will be lower than in 2019. Production capacity is likely to still be underutilised next year, with inflation still at 0.0%. An expansionary monetary policy therefore continues to be necessary for crisis management. Our monetary policy contributes to crisis management via three channels. First, we provide favourable financing conditions for Swiss businesses and the public sector via the low level of interest rates. This eases the burden on those companies and institutions that face increased funding needs as a result of the crisis. Second, the negative interest rate and our foreign exchange market interventions counter the upward pressure on the Swiss franc. This pressure is especially high in periods of uncertainty, and a strong appreciation would weigh particularly heavily on the economy in the crisis. We have therefore made considerable foreign exchange purchases this year to maintain appropriate monetary conditions. Third, we are making additional liquidity available to banks via the CRF, allowing them to refinance the COVID-19 loans they grant and to do so at an interest rate of −0.75%.
This is something on which individual banks will have to take a view, but I would like to offer some general advice. First, banks should accept that profits for 2003 may not reach budgetted targets as a result of the outbreak; and they should not strain too much to make up the difference. When profitability comes under pressure, it is important to avoid the mistakes that might arise from over-aggressive business tactics. Keep the bank healthy from a capital and liquidity point of view in order to benefit from the business recovery when it comes, as it surely will. Banks should also monitor closely the financial position of their customers and adopt a supportive attitude to those experiencing financial difficulties as a result of the SARS outbreak. This means being prepared to offer temporary relief arrangements to borrowers who find that they cannot service their debts in the current environment. This should not be seen as soft option for customers since the banks will certainly not benefit if those customers go bankrupt. Nor do I suggest that relief should be offered indiscriminately. The long-term viability of the customer or his business, his track record and his willingness to cooperate with the bank are all factors to be taken into account in deciding whether to restructure debts. Each case thus needs to be looked at on its merits.