How does the SNB monitor the economy?
It is of fundamental importance that the SNB keep its finger on the pulse of the Swiss economy: as it fulfils its statutory mandate to ensure price stability, it must take due account of economic developments.
What is meant by economic developments?
The focus here is on the general state of a national economy. The economy may fluctuate strongly over time and typically goes through four phases in a so-called business cycle: expansion, peak, recession and trough. A business cycle lasts from the beginning of an expansion to the end of a trough.
The focus here is on the general state of a national economy.
The current situation of a national economy can be assessed using various indicators, such as the growth rate of gross domestic product (GDP), the capacity utilisation of companies, and the unemployment rate.
A national economy can be influenced by a range of factors, such as rising commodity prices, geopolitical tensions and technological developments. However, fiscal and monetary policy measures may also temporarily have an effect.
Good to know
Gross domestic product (GDP) indicates the total value of all final goods and services produced in a country during a specific period, after subtracting the cost of intermediate goods. Real GDP is the most important measure of an economy’s value added.
How smoothly is the economic engine running?
The SNB’s economists regularly perform analyses of the economic situation. These analyses constitute an important basis for the monetary policy decision made by the SNB’s Governing Board at its monetary policy assessments.
At the forefront of the analyses are indicators such as GDP growth, the capacity utilisation of companies, demand for goods, consumer sentiment, but also labour market conditions. Forecasts are also made concerning the broader economic development, including a GDP growth forecast, which the SNB publishes for the current year and the next.
In its analyses, the SNB takes into account the economy in Switzerland as well as in other countries, since, as a small open economy, Switzerland is significantly influenced by developments abroad. The SNB pays special attention to Switzerland’s key trading partners, as well as to the world’s largest economies.
The SNB uses data it has collected itself as well as data provided by external sources, such as the Swiss Federal Statistical Office and the Swiss Economic Institute at the ETH.
Taking the pulse of the economy
The SNB has eight offices distributed across the country in order to have a timely overview of the mood among Swiss companies. The delegates who work in those locations interview company executives to find out how business is going. This provides the SNB with an up-to-date impression of current economic conditions and of the business perspective from the vantage point of companies. This information flows into the regular economic analyses for the attention of the Governing Board.
Regional network
The SNB delegates are supported by the Regional Economic Councils, which help them to monitor economic developments in their regions. They keep SNB management informed of the economic situation and the effects of monetary policy in their regions. The Bank Council elects three to four members of a Regional Economic Council per region. Persons with an impeccable reputation, business experience and recognised knowledge of their industry are eligible for membership.
