Central bank urges swift economic reforms
The head of the Swiss National Bank (SNB) says economic growth is urgently needed to sustain Switzerland’s pension schemes in the face of a rapidly ageing population.
Jean-Pierre Roth also called for greater liberalisation of domestic industries to stimulate growth and improve competitiveness.
“Maintaining the current structures would keep eroding welfare,” said Roth.
He added that highly regulated industries were able to maintain high prices and were less innovative technically.
However, Roth fears that many Swiss citizens will continue to oppose economic reforms, given their uncertainty about the future of Switzerland’s economy.
“Such a development must be avoided at all costs,” Roth said at a meeting of political and economic leaders in Lucerne on Monday.
Privatisation needed
He said he regretted that the Swiss electorate were not more keen to step up the pace of reform in domestic industries.
Roth was referring to the electorate’s decision to turn down a number of referenda aimed at deregulating and privatising state-run organisations.
Despite moves towards privatisation, Switzerland’s electricity sector remains divided into regional monopolies.
Switzerland’s leading telecoms operator, Swisscom, which is majority owned by the state, still controls the “last mile” – the final connection between home and the exchange.
Roth believes Swiss citizens may be against liberalisation because of a series of privatisation disasters in foreign countries.
Exchange rates
Roth also called on politicians to solve the country’s economic problems and promote growth.
He said the only thing the central bank could do to support recovery was to use monetary policy to encourage growth while maintaining price stability.
Roth predicted that the Swiss economy would begin to emerge from a trough this autumn.
“The Swiss economy will bottom out this autumn and will return to moderate growth next year,” he said.
He added that the SNB would continue to keep interest rates low – they are currently close to zero per cent – to support the recovery.
On the SNB’s exchange rate policy, Roth once again repeated his commitment to act decisively to curtail any strengthening of Swiss franc against the euro – something that has hurt exporters in recent years.
The Swiss economy remained in recession in the second quarter, shrinking by one per cent year-on-year, after contracting by 0.6% in the first quarter.
swissinfo
The Swiss economy has become more liberalised in the past few years.
Some monopolies have been dismantled – such as the telecommunications monopoly (partial).
Last year voters turned down an initiative to liberalise the electricity market.
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