Investing.com - Switzerland’s economic activity faces likely headwinds from increased turmoil over global trade, according to Swiss National Bank Chairman Martin Schlegel.
Speaking at the central bank’s annual general meeting, Schlegel flagged that uncertainty surrounding an aggressive U.S. tariff agenda remains "very high," particularly the levies’ possible impact on inflation and the broader economy. Maintaining prices in Switzerland at the SNB’s target inflation rate of 0% to 2% is subsequently becoming ever more important, he said.
"An economic slowdown cannot be ruled out," Schlegel warned, adding that "growth is likely to be lower than was expected just a few weeks ago."
In its latest forecast in March, the SNB projected that the Alpine nation’s gross domestic product would grow by 1% to 1.5% this year. Its average rate of expansion stands at around 1.8%.
Switzerland, which is heavily reliant on exports for its economic output, is facing a 31% tariff from the Trump administration on its imports to the United States. Trump has temporarily delayed these so-called reciprocal tariffs for 90 days, with the White House looking to secure deals with individual countries.
Still, Schlegel said a shift to a more protectionist trading stance by the U.S. could hit Switzerland’s economy, while global economic integration could also be put in danger in the longer term.
Schlegel said the SNB is ready to adjust monetary policy if necessary -- either by changing interest rates or carrying out foreign currency interventions -- to respond to external shocks.
(Reuters contributed reporting.)