BizKnowledge Watch

The OECD has just launched the Economic Survey of Switzerland. According to the study, Switzerland has made a broadly balanced recovery from the economic crisis but external factors are now weighing on the near-term outlook.

The report highlights substantial uncertainty going forward, especially in the context of the euro-area crisis. While strong exports and investment-driven domestic demand boosted growth in 2010 and 2011, economic indicators now point to a pending period of slow growth as a result of the recession in Europe.

With inflationary pressures extremely low, the OECD recommends that Switzerland maintain an expansionary monetary policy. It warns, however, of the need for stronger macro-prudential legislation to dampen increases in mortgage lending and to avoid the buildup of a domestic housing bubble.

To better control banking risks posed by the real estate sector, the OECD recommends that the Swiss National Bank enlarge data collection for effective oversight of the mortgage market.

A special chapter of the survey also highlights that meeting greenhouse gas emission reduction targets will require more cost-effective policies, in particular as concerns passenger road transport.

The full text is available for the IESE Community here.