Jean-Pierre Roth: Recent economic and financial developments in Switzerland Introductory remarks by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the end-of-year media news conference, Zurich, 13 December 2007. *  *  *  Economic outlook The last few months have seen a number of remarkable events in the global economy. The US dollar has plunged, dropping below the level attained in 1995 against the Swiss franc. Oil prices have continued to soar, threatening to breach the hundred dollar mark. Sub-prime credit markets continue to disrupt financial markets. How have these factors affected the international economy? The US economy is affected simultaneously by the unfavourable developments in real estate markets, which are impacting on credit markets, and by increasing oil prices. At the same time, the fall in the dollar is bolstering external demand, so that most observers are not forecasting more than a temporary decline in US economic growth next year. As for the European economy – which is less open than the national economies of which it is composed – it is only slightly affected at present by the upturn in the euro, mirroring the downturn in the US dollar. The outlook for European growth in 2008 remains favourable, despite a light downward correction. All in all, the international economic situation remains generally positive, although it is true to say that this assessment is even more uncertain than three months ago.
BIS Review 150/2007  3  Observed inflation December 2007 2004 Q1  Inflation  2005 Q2  Q3  Q4  Q1  2006 Q2  Q3  Q4  Q1  2007 Q2  Q3  Q4  Q1  Q2  Q3  Q4  0.06 0.87 0.91 1.38 1.35 1.06 1.18 1.10 1.23 1.33 1.22 0.46 0.09 0.52 0.63  Inflation forecast of September 2007 with Libor at 2.75% and of December 2007 with Libor at 2.75% 2007 Q1  Forecast September 2007, Libor at 2.75% Forecast December 2007, Libor at 2.75%  4  2008 Q2  Q3  Q4  Q1  2009 Q2  Q3  Q4  Q1  2010 Q2  Q3  Q4  Q1  Q2  Q3  Q4  0.66 1.20 1.50 1.38 1.57 1.69 1.75 1.80 1.85 1.91 1.96 2.00  1.62 2.14 1.54 1.56 1.51 1.47 1.46 1.46 1.48 1.51 1.53 1.55  BIS Review 150/2007