With the strong economic fundamentals and the positive growth prospects of Asia, international and regional financial institutions are also now shifting their focus into the region. With the high savings rate in Asia, and of its massive requirement for infrastructure development, the region would benefit significantly from more effective and efficient intermediation of Asia’s surplus funds. Indeed, intra-regional cross-border portfolio investments have already increased to 28 percent of total assets holdings in 2011 compared with 21 percent in 2001. The gains from greater regional financial integration will be farreaching as it will not only bring about a more efficient allocation of resources in the region but it will act as a catalyst for greater regional economic growth. Over the coming years, as  BIS central bankers’ speeches  1  growth experienced in the developed economies is expected to remain slow in the aftermath of the financial and debt crisis, the growth performance of Asia is expected to continue resulting in the region becoming a more important component of the global economy. Asian funding markets have also remained highly accessible during this period with Asian names enjoying strong demand and attractive funding costs at a time when the developed countries funding markets have tightened. During this more challenging time, Asian sovereigns such as Indonesia, Philippines, Thailand, Sri Lanka, Vietnam and Malaysia continue to successfully tap the market and to issue bonds with tenure up to 30-years.
A more significant slowdown in the global economy might ease inflationary pressure. Given these conditions, the SNB is maintaining its cautious stance and leaving its monetary policy strategy unchanged. In view of the medium-term inflation outlook, it can afford to do so. After all, there is enough reason to suggest that the current inflationary trend is of a transitory nature. The SNB will keep a close watch on the price of oil, movements in the Swiss franc, the economy, and developments in the financial markets, so as to assess their impact on the inflation outlook and react swiftly, in order to maintain price stability in the medium term. Global economic outlook With exports accounting for 52% of GDP, the Swiss economy has a strong global presence. This is an opportunity, but it also means that the international environment has a considerable impact on economic developments in Switzerland. The US economy – until recently the principal driver of global economic growth – has made scant headway over the last three quarters. However, the period of near-stagnation which the US economy is currently experiencing is not likely to be too prolonged. The resolutely expansionist nature of US monetary and fiscal policy, combined with a weak US dollar that favours exports, should help to reenergise the US economy.