On the other hand, some evidence appears to suggest that digitalisation in the retail trade leads to faster pass-through – that is to say, it increases the responsiveness of prices to shocks affecting the economy, such as the strong appreciation of a nation’s currency. Studies show that the growth of online trade in recent years may have helped to almost double the speed of price adjustments in the US retail industry. 4 Switzerland too has seen a trend towards faster price adjustments over the last few years. 5 Thus, shocks such as strong appreciation or depreciation of the Swiss franc could feed through to inflation more rapidly in the future. The SNB is therefore analysing the repercussions of digitalisation in depth, in order to understand the impact on inflation as thoroughly as possible and ensure that it is able to take action where necessary. 1 For a discussion about the causes and implications of low inflation, cf. Constâncio, Vítor (2017) ‘Understanding and overcoming low inflation’; remarks at conference on Understanding inflation: lessons from the past, lessons for the future? Frankfurt am Main, 21–22 September. 2 BAK Economics AG and Swiss Association of Distance Selling. 3 This term describes the impact of booming online trade on the traditional retail trade as well as on economic growth and inflation. 4 The costs to companies of price changes (‘menu costs’) are generally lower for online traders as they only have to modify their prices online; traditional traders on the other hand have to produce new labels, brochures, etc. Cf.
A rational domestic demand and import policies will be required (with a 5.3% rise in imports, given the oil price growth), in order to keep the current account deficit at about 6.5% of GDP (EUR 3 billion), the same as in the current year. Of course, this implies a continuation of heavy dependence on foreign sources of financing in 2010. (2)  Given stagnation in direct and portfolio investments (EUR 2.1 billion in 2009 vs. EUR 2.3 billion in 2010), this would mean that: −  the current account deficit will have to be financed by foreign borrowing;  −  the external debt-to-GDP ratio will increase from 83% last year and about 93% in 2009, to about 100%, which is feasible, but will certainly not improve the country’s credit rating, and the question is to what extent the global downward trend in interest rates can carry over to this country. This is all too important, as we know that in 2010:  (3)  −  total debt repayments (EUR 8.3 billion in principal and EUR 1.4 billion in interest) will amount to EUR 9.6 billion (EUR 10.8 billion in 2009); and  −  total utilisation of foreign sources of financing will stand at EUR 12.6 billion (13.5 billion in 2009). The anticipated fiscal deficit reduction, in terms of consolidated general government (including HAC), from HRK 15 billion to HRK 12.1 billion, i.e.