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View Poll Results: Do you agree with the experts that we'll see some economic growth?
Yes 8 44.44%
No 6 33.33%
Don't know 4 22.22%
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  #1  
Old 29.08.2006, 15:56
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The Swiss economy: improvement or just hot air?

Many of you may have heard the news recently that the Swiss economy is finally picking up pace. The national bank has already raised interest rates and looks likely to raise them again. Admitedly the rates were almost at zero, so the news isn't exactly exciting for your savings account just yet...

I think we all know that in the last 5-7 years the economy hasn't grown very much at all. We know that for many people salaries have gone backwards (especially in real terms), during a period when salaries have been rising faster in other countries.

Swissinfo recently ran this story. A small quote:

Quote:
The Swiss economy will be buoyant in 2007 and is expected to head towards full employment according to the National Bank. Its president, Jean-Pierre Roth, said the bank would maintain its path of interest rate hikes to prevent the expanding economy from overheating although inflation remains under control.
Mind you, the growth estimates still aren't fantastic, but they do represent an improvement over the past years.

So my question to everyone here is this: Do you feel upbeat about the Swiss economy? Do you see any real signs that we are headed for growth? Do you feel like you are going to see a salary increase anytime soon (if staying in the same job).

The national bank says that we are headed for "full employment" - many of you are unemployed - do you share their optimism?

I note also that the Swiss Franc, which usually tracks at around 1.55 to 1.56 to the euro is now at 1.61 - despite the interest rate rise which should theoretically have strengthened it, not weakened it.

So tell us about your personal feelings about the growth predictions...
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  #2  
Old 29.08.2006, 16:09
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Re: The Swiss economy: improvement or just hot air?

to be honest..................the ebb and flow of the Swiss economy has hardly been a rollercoaster ride. Let's see - there's a focus on services because manufacturing is a "minority" business. Services are usually more resilient to other market forces (essential not leisure that is) so the world changes and we stay the same.

The only slide I remember was with Swissair.

Inflation has been practically zero for eons; interest earned on regular business banking deposits also close to zero. Even fuel prices only just have an inflationary push.

Unemployment is around 4% which for many is the line between voluntary and involunary unemployment - ie. full employment. Benefits are good enough to see this stay the way it is.

With the slight push since 2001 in favour of the employer, wages have stagnated - but in real terms I do believe they're around the same.

I don't rate Swissinfo that highly. I also would say that J-P is putting a little fear into one and all to make sure things don't change too quickly

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Old 29.08.2006, 16:11
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Re: The Swiss economy: improvement or just hot air?

Also a point to note is that I believe this year has been excellent for tourism. I'll try to find something to back that up I think that plays a part in the situation too.
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Old 29.08.2006, 16:25
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Re: The Swiss economy: improvement or just hot air?

Quote:
Unemployment is around 4% which for many is the line between voluntary and involunary unemployment - ie. full employment. Benefits are good enough to see this stay the way it is.
Important to remember also that those unemployment figures are only for those claiming unemployment insurance, which cuts out after a year and a half. Also those who are being "retrained" by the unemployment office are also removed from these figures. So do we have any numbers for the people who are retraining or are long term unemployed? How about students that can't get an apprenticeship - since they've never worked they won't be entitled to benefits and also won't appear in the statistics. How about those that are underemployed (i.e. don't have ENOUGH work to make ends meet).

I think we should be cautious when talking about "full employment" or believing that 3-4% is the real figure. All countries play games with their unemployment statistics, but these tricks are kind of hard to ignore...
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Old 29.08.2006, 16:41
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Re: The Swiss economy: improvement or just hot air?

Hmm. Recession? What recession, I have a job. That's usually the response to people who weren't affected by the global 'hiccup' around 2001 onwards. Sept. 11th had a MAJOR impact in advertising - where I was working at the time - and only in the past year have things picked up there.

The travel and tourism sector in my 'field' was badly affected - SARS/Bird Flu/Hijackings/Wars - made people wary and the tills stopped ringing.

Education, strangely enough, suffered too.

Of course, all these areas also had underlying problems - see Swissair - but global events played a large part. Germanys staggering economy seems to overshadow and influence the Swiss economy. Not sure if this is perceived or real.

Personally, I see more job adverts now - whether these are Puff-Pieces from firms scouting who's out there or actual vacancies I can't tell. Seems to be hot air from my perspective. All very discouraging until I find a decent job then I won't care

Last edited by Uncle Max; 29.08.2006 at 17:52.
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  #6  
Old 29.08.2006, 17:48
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Re: The Swiss economy: improvement or just hot air?

Quote:
Germanys staggering economy seems to overshadow and influence the Swiss economy. Not sure if this is perceived or real
It is an open fact, I wish they would get their act (35 hour week, protests and spass) together and things would pick up again for a looong time.

I feel easier in the Union.

JC
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  #7  
Old 29.08.2006, 17:52
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Re: The Swiss economy: improvement or just hot air?

Slow down in the Swiss economy? They've got to be kidding. Take a look around... Often what you see on your daily life is much more relevant than some void statistics from the central bank. I have not seen any sign of a slow down over the last few years.
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  #8  
Old 29.08.2006, 17:55
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Re: The Swiss economy: improvement or just hot air?

Quote:
Slow down in the Swiss economy? They've got to be kidding. Take a look around... Often what you see on your daily life is much more relevant than some void statistics from the central bank. I have not seen any sign of a slow down over the last few years.
Hmm, you could be fooled by the Ferraris and Cayennes. All that glitters, etc. Meanwhile, everyone else tries to pay the rent
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Old 29.08.2006, 18:03
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Re: The Swiss economy: improvement or just hot air?

Quote:
Hmm, you could be fooled by the Ferraris and Cayennes. All that glitters, etc. Meanwhile, everyone else tries to pay the rent
Uncle Max - pls don't get me wrong, I'm well aware that there are people who have it tough - but in general, I believe that is much less than in other places.
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  #10  
Old 29.08.2006, 18:14
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Re: The Swiss economy: improvement or just hot air?

Quote:
Slow down in the Swiss economy? They've got to be kidding. Take a look around... Often what you see on your daily life is much more relevant than some void statistics from the central bank. I have not seen any sign of a slow down over the last few years.
That very much depends on the sector you work in... My original point is that the economy is stagnant, and has been for some time. Tourism has been picking up, but only because it has been suffering for the last few years. Remember back in 2000 how it was hard to get a hotel room on the snowfields and the slopes were heavily packed with Swiss on weekends? Then suddenly there just seemed to be less people around on the snow fields? I know because I'm up there all the time.

The point is have you seen evidence that the economy is picking up? We aren't saying that it is slowing down. Though many would argue that not going forward is the same as going backwards. Have you noticed that interest rates have been almost zero for a very long time - is that not evidence that the economy has stalled?
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Old 29.08.2006, 18:17
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Re: The Swiss economy: improvement or just hot air?

Quote:
Uncle Max - pls don't get me wrong, I'm well aware that there are people who have it tough - but in general, I believe that is much less than in other places.
Let's not forget that this is a very hard country to be poor in. Since there are quite a few rich people here, we tend to forget how the other half live... If I were to be poor I'd rather do it in a country with a lower cost of living!

Don't believe all the statistics...
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Old 29.08.2006, 23:17
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Re: The Swiss economy: improvement or just hot air?

Quote:
The point is have you seen evidence that the economy is picking up? We aren't saying that it is slowing down. Though many would argue that not going forward is the same as going backwards. Have you noticed that interest rates have been almost zero for a very long time - is that not evidence that the economy has stalled?
Things seem to be picking up in the IT field a bit, but I hear lots of complaints about wages not having increased much in the last few years whereas costs have gone up.


Gav
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Old 30.08.2006, 12:13
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Re: The Swiss economy: improvement or just hot air?

Quote:
That very much depends on the sector you work in... My original point is that the economy is stagnant, and has been for some time. Tourism has been picking up, but only because it has been suffering for the last few years. Remember back in 2000 how it was hard to get a hotel room on the snowfields and the slopes were heavily packed with Swiss on weekends? Then suddenly there just seemed to be less people around on the snow fields? I know because I'm up there all the time.

Honestly, I have always been strugling to find a room for the w/e on the slops - I've never noticed a significant down in turism (skiing) since 2000 - at least in the german speaking part (not sure about the FRench one). The fact that hotels are not willing to give you a room unless you stay for 4-5 nights is not a sign of strong economic situation???

The point is have you seen evidence that the economy is picking up? We aren't saying that it is slowing down. Though many would argue that not going forward is the same as going backwards. Have you noticed that interest rates have been almost zero for a very long time - is that not evidence that the economy has stalled?
As you know Swiss economy has quite unique caracteristics which make it 'different' from the ones of many other countries in the world. The Swiss economic systems is quite 'closed' and 'protected'. This means that low interest rates here are not necessarely the same thing as low interest rates in the US/Germany. Anyway, of course everything is relative and even here perhaps compared to a few years ago things may have slightly improved in pure economic terms - but compared to other economies Switzerland is way up there.
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Old 30.08.2006, 12:15
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Re: The Swiss economy: improvement or just hot air?

sorry I've messed things up a bit, this part...

Honestly, I have always been strugling to find a room for the w/e on the slops - I've never noticed a significant down in turism (skiing) since 2000 - at least in the german speaking part (not sure about the FRench one). The fact that hotels are not willing to give you a room unless you stay for 4-5 nights is not a sign of strong economic situation???

was supposed to be a replay to the first part of your comments... sorry for the confusion
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Old 30.08.2006, 15:55
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Re: The Swiss economy: improvement or just hot air?

Quote:
As you know Swiss economy has quite unique caracteristics which make it 'different' from the ones of many other countries in the world. The Swiss economic systems is quite 'closed' and 'protected'. This means that low interest rates here are not necessarely the same thing as low interest rates in the US/Germany. Anyway, of course everything is relative and even here perhaps compared to a few years ago things may have slightly improved in pure economic terms - but compared to other economies Switzerland is way up there.
Ah.. the old argument about Switzerland's economy being somehow special, isolated and protected. Fact is that it is a competitive and increasingly global world. As this trend increases Switzerland faces more and more external pressures and how well it survives depends on whether it wakes up to that fact. By saying "Switzerland is way up there" I guess you mean in absolute terms - like GDP per head of population. Yes this is true, but without growth this number stays the same. Strong growth in other countries means that this gap is narrowing all the time. The day will come in the not too distant future when Switzerland sees other countries displace it in those statistics - unless it can get its growth to the same levels.

So the bottom line - growth is needed - even in the "special" Swiss economy.
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Old 31.08.2006, 10:52
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Re: The Swiss economy: improvement or just hot air?

All I can say is that coffee shops, cafes and restaurants and bars don’t lack business. I’ve yet to see a migros or coop restaurant anything but full at lunchtimes six days a week. The amount of disposable income seemingly available for the Swiss to spend on drinks and food is astonishing. Events organised for weekends always appear to be well attended from village fetes to national events the crowds turn out and all eat in situ.

Even furniture shops have cafes where you can take a break from browsing and spend CHF5 on a coffee and croissant. Or better still time your trip to the shop for midday and have lunch there.
I would say that consumer spending (which must be some indicator of confidence in the economy) is definitely thriving, getting into Fribourg on a Saturday morning is hell, shops are packed and of course it’s thirsty work shopping so cafes are also packed.

We had some work done on the house recently and getting tradesmen to come round even to give a quote was difficult, many were booked up for the next 3/4 weeks.

Then there are the latest EU figures to 2005 that show Swiss exports up for the second consecutive year and consequently the balance of trade showing another positive rise.
Using my simplistic formula of café, shopping trends and availability of tradesmen I would say that the economy is pretty healthy.

Nick
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Old 31.08.2006, 11:09
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Re: The Swiss economy: improvement or just hot air?

Quote:
Then there are the latest EU figures to 2005 that show Swiss exports up for the second consecutive year and consequently the balance of trade showing another positive rise.
Just one interesting point regarding trade with the EU - the following very interesting article came up today on Swissinfo. A short excerpt:

Quote:
Criminals have recently begun moving goods through Switzerland and other countries outside the EU to put investigators off the scent. They are then sent back to the EU to repeat the process – hence the term carousel.

"Switzerland has figured in the past in respect of movements of [fraudulent] money, but not significantly in the movement of goods," British customs spokeswoman Sandra McKay told swissinfo.

"It began to feature increasingly last summer when trade figures showed that trade to third countries, including Switzerland, began to outstrip trade within the EU."
The article is a very interesting read, I encourage everyone to have a look!

I would also be hesitant about using crowded shopping centers as an indicator of economic growth. The problem is that because shopping hours are restricted - like no shopping on Sunday, it compresses the available time left to getting done what you need to do.

I wasn't make the point that the economy was unhealthy, just that it wasn't growing - the question is whether we see signs of growth - for example shops were empty last year, now they are full would be an example. Shops always full just says that the status quo is being maintained (unless more shops are being built and they are just as full, or Sunday trading was allowed and the shops were still full)
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Old 31.08.2006, 11:12
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Re: The Swiss economy: improvement or just hot air?

Quote:
All I can say is that coffee shops, cafes and restaurants and bars don’t lack business. I’ve yet to see a migros or coop restaurant anything but full at lunchtimes six days a week. The amount of disposable income seemingly available for the Swiss to spend on drinks and food is astonishing. Events organised for weekends always appear to be well attended from village fetes to national events the crowds turn out and all eat in situ.

Even furniture shops have cafes where you can take a break from browsing and spend CHF5 on a coffee and croissant. Or better still time your trip to the shop for midday and have lunch there.
I would say that consumer spending (which must be some indicator of confidence in the economy) is definitely thriving, getting into Fribourg on a Saturday morning is hell, shops are packed and of course it’s thirsty work shopping so cafes are also packed.

We had some work done on the house recently and getting tradesmen to come round even to give a quote was difficult, many were booked up for the next 3/4 weeks.

Then there are the latest EU figures to 2005 that show Swiss exports up for the second consecutive year and consequently the balance of trade showing another positive rise.
Using my simplistic formula of café, shopping trends and availability of tradesmen I would say that the economy is pretty healthy.

Nick
Pretty much agree - and this can be extended to many other areas/activities which makes you really doubt how can people thnk/say the economy in Switzerland is down or somewhat staggering.

For instance, can anyone tell me why Zurich has the highest density of hairdresser per sqk in the world? And they are not exactly cheap here (I cut my hair myself but I hear you pay 70-80CHF for a haircut!) - nor very fashianable (look at women hairstyles in town, more like late 80s style..).

I could go on and on...
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Old 31.08.2006, 11:20
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Re: The Swiss economy: improvement or just hot air?

Quote:
Ah.. the old argument about Switzerland's economy being somehow special, isolated and protected. Fact is that it is a competitive and increasingly global world. As this trend increases Switzerland faces more and more external pressures and how well it survives depends on whether it wakes up to that fact. By saying "Switzerland is way up there" I guess you mean in absolute terms - like GDP per head of population. Yes this is true, but without growth this number stays the same. Strong growth in other countries means that this gap is narrowing all the time. The day will come in the not too distant future when Switzerland sees other countries displace it in those statistics - unless it can get its growth to the same levels.

So the bottom line - growth is needed - even in the "special" Swiss economy.
I think we are saying the same thing Mark. What I think is only that one needs to be careful when comparing Swiss economy ceteri paribus with other 'more classic economies'. Swiss economy is based on the financial system and to lesser extent on turism. Lacking heavy/light traditional industrial production. This makes difficult an apple-to-apple comparison in real terms. Interest/growth rates can me misleading here beacuse of the particular nature of this economy.
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Old 31.08.2006, 11:27
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Re: The Swiss economy: improvement or just hot air?

Here's an article from Swiss from March last year - talking to the one of the members of the governing board of the SNB (Swiss National Bank) about Switzerland's poor growth record and whether or not it really is poor growth, and if the economy is somehow special. The link can be found here. Interesting read.

Some quotes:

Quote:
If the OECD is to be believed, Ireland has overtaken Switzerland in terms of economic "wealth" – pushing the once-mighty Swiss into fifth place worldwide.

Kohli conceded that growth was still sluggish, but said: "It is probably only half as bad as it looks."

While high Swiss prices partly reflect the high wages – and productivity – of its workers, they are also partly the result of "lack of competition, rigidities, administrative hurdles and inefficiencies".

And the SNB economist concludes: "If current trends persist, Ireland will eventually pass us."
I also liked this quote about a website:

Quote:
Kohli commented: "Irish people themselves do not feel that they live in a low-price country, as the mere existence of the popular Internet site www.ripoffireland.org suggests."
I wonder if englishforum.ch will ever get a mention in the press like that?

But the quote that astounded me the most was this one:

Quote:
However, other studies show that Switzerland also had the second lowest per capita average growth rate of 12 European countries from 1880 through to 1995.

As Kohli remarks, this is a puzzle: "19th century Switzerland was poor by European standards – [so] how has it managed to become one of the continent’s richest countries?"
Right - so we were poor, then all of a sudden we were rich - and we did this all without economic growth, so maybe this whole growth thing is garbage?

"Don't mention the war" as Basil Faulty used to say.
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