Switzerland faces economic strains as German trade cool

Switzerland is experiencing economic weakness due to reduced demand from its key trading partner, Germany, according to Swiss National Bank President Martin Schlegel.

Speaking at a Bundesbank event in Frankfurt, Schlegel noted that Germany’s industrial slowdown is impacting Swiss industry, with Germany accounting for about 20 per cent of Switzerland’s trade volume.

The strong Swiss franc, which has reached its highest level against the euro since 2015, is weighing on industrial exports. Swiss Steel Group announced job cuts due to weak foreign demand, particularly from the German automotive industry.

The Swiss National Bank (SNB) faces challenges ahead of its December 12 interest rate decision, balancing low rates with slow inflation.

Schlegel indicated that further easing is likely, with the SNB prepared to lower rates below zero if necessary to maintain price stability. Switzerland had negative rates for almost eight years until 2022.

Attribution: Bloomberg

Subediting: M. S. Salama