Both this year and next, growth will be considerably slower than we predicted only a short time ago. We expect the economy to go into virtual stagnation in the second half of 2001. Overall, the economy will presumably grow by about 1.5% in 2001. In line with the development in the major economic blocs, notably exports and capital spending have shrunk drastically, putting a major break on economic growth. Although consumer confidence has been dented, consumption has so far turned out to be a cornerstone of growth. The decline in construction investment is also clearly more moderate than the fall in capital spending. We expect the economy to follow a path of muted growth and to perform below its potential until the middle of next year. Only the second half of 2002 should see the economy expanding in line with the development abroad. We project average growth of approximately 1.0% for 2002. Unemployment is likely to climb in the months ahead. We consider the current interest rate level and the existing monetary conditions to be adequate to enable the economy to return to sustainable, non-inflationary growth. Our forecasts, however, are fraught with uncertainties. In the aftermath of the terror attacks in the United States, these uncertainties are now particularly substantial. Investment and consumption depend on whether market participants have confidence in the quality and stability of the basic conditions.
The introduction of euro notes and coins will have additional positive effects on the economic development in Europe, as it will be easier to compare prices and confidence in the new currency will be strengthened. Moreover, the euro is to be regarded positively not only with regard to the Swiss economy but also Swiss monetary policy. The Swiss export sector will profit from lower transaction costs, and currency devaluations - as previously implemented by some European countries in order to improve their competitiveness - will be a thing of the past. Swiss monetary policy will benefit from the fact that a large economic bloc now exists in Europe which pursues similar goals in terms of monetary policy. All in all, exchange rate fluctuations between Switzerland and the EMU countries should thus remain below the levels seen before the launch of the euro. Furthermore, the markets will realise in due course that there is no reason why the Swiss franc, with regard to the role as a safe haven currency, should be assessed differently than the euro. This realisation should reduce the risk of sharp appreciations. As a result of the introduction of euro notes and coins, the euro will increasingly be used as a means of payment in the tourism sector and the hotel and restaurant industry as well as in foreign trade, to some degree simply as a substitute for the D-mark.