Strong franc threatens Swiss economy-SECO chief econ

Published 10/19/2010, 12:50 PM
Updated 10/19/2010, 12:52 PM

* The strong Swiss franc is a danger for the economy-paper

* No classic deflation scenario-SECO chief econom. in paper

ZURICH, Oct 19 (Reuters) - The strength of the Swiss franc represents a danger for the Swiss economy, Aymo Brunetti, chief economist at the State Secretariat for Economic Affairs (SECO) was quoted as saying on Tuesday.

"On the whole, exports have been less dynamic recently and the business expectations in industrial firms have become slightly less optimistic," Brunetti said in an interview with Swiss newspaper Finanz und Wirtschaft made available on Tuesday.

"The exchange rate shows its effects in the medium term. That is why the current strength of the Swiss franc represents a danger for the economy," Brunetti said.

The Swiss franc has risen more than 10 percent against the euro since the beginning of the year and is also trading at record high levels against the dollar.

The strong franc was partly responsible for current low inflation levels, Brunetti said, adding that, however, the conditions for a classic deflation scenario were not fulfilled in Switzerland.

In September, the SECO raised its growth forecast for the Alpine economy to 2.7 percent for 2010 but cut it to 1.2 percent for 2011.

(Reporting by Silke Koltrowitz)

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