Swiss investor confidence increased only slightly in July, signaling the economy may struggle to gain further momentum amid a slump in the neighboring euro area.
An index of investor and analyst expectations, which aims to predict economic developments six months in advance, rose to 4.8 points in July from 2.2 in June, the ZEW Center for European Economic Research in Mannheim, Germany, and Zurich-based Credit Suisse Group AG said in a statement today.
The “indicator suggests that analysts’ are still cautious in their expectations for economic growth,” Credit Suisse’s Maxime Botteron and Lena Jaroszek of the ZEW said.
To shield the economy from the turmoil in the 17-nation currency bloc, its biggest trading partner, the Swiss National Bank has a limit of 1.20 per euro on the franc to reduce the risk of deflation and recession.
The SNB is expected to keep the euro-franc floor for 1–2 years, Botteron and Jaroszek also said, adding that the majority of survey participants now forecast no change in the franc’s rate versus the euro over the next six months.
The euro-area economy has contracted the past six quarters, its longest recession on record. Swiss growth for the first quarter outpaced that even of neighboring Germany, and the SNB expects growth as much as 1.5 percent this year.
In Germany, investor confidence unexpectedly dropped in July, falling to 36.3 from 38.5 in June, compared to a median economist estimate of 40, ZEW said yesterday.
The Swiss survey of 44 analysts was conducted between July 1 and 15.