Swiss economic index falls due to Middle East conflict

Middle East war causes economic index to plummet Keystone-SDA

One indicator for the Swiss economy fell deep into negative territory in March due in large part to the conflict in the Middle East.

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The so-called UBS CFA indicator slumped to -35.0 in March from +9.8 points in February, as UBS economists announced on Wednesday. The big bank compiles the indicator, which is based on a survey of experts, together with the CFA Society Switzerland every month.

At the current level, the indicator signals a pessimistic outlook for the Swiss economy over the next six months, according to the press release. In recent history, similar declines have been observed following the tariff shocks last April and August. Now the Middle East crisis is weighing on sentiment.

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The index level results from the balance of analysts who expect a positive (10%) or negative (45%) change in the economic situation over the next six months – with the number of optimists halving and the number of pessimists almost quadrupling in March. However, just under half of the 40 respondents expected the situation to remain unchanged.

Higher inflation expectations

With regard to inflation, expectations have changed significantly due to the higher oil price. In March, the proportion of analysts who expect inflation to accelerate in Switzerland over the next six months rose from just under 15%t to 55%.

However, the majority of experts expect the oil price to normalise over the next six months. The majority consider an oil price of between $70-90 (CHF55-71) per barrel to be the most likely scenario. However, the upside risks remain considerable, UBS emphasises: according to the survey, Brent crude oil is likely to be quoted in the range of $90 to $100 per barrel with a probability of around 20%, while prices above the $100 mark are assigned a probability of 12%.

The survey was conducted between March 12 and 16.

Translated from French by AI/jdp

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