Strong franc threatens Swiss economy

Switzerland's economy is threatened with a decline for the first time in six years due to the strengthening franc, and its central bank has fewer and fewer "weapons" at its disposal to combat recession, reports the Patria News Agency.

Interest rates are already at a record low of -0.75 percent, and it is impossible to lower them further without the risk of money being withdrawn from banks.

Thomas Jordan, governor of the Swiss National Bank, will hold a meeting with bankers this week, before the announcement of the decision on interest rates and forecasts for economic growth and inflation, which is scheduled for Thursday.

Jordan is expected to announce the possibility of further measures if the forecasts worsen and if complications arise due to the crisis in Greece, or the possible collapse of the eurozone.

The Swiss economy declined by 0.2 percent in the first quarter, ending a streak of 13 quarters of constant growth. Economists in a Bloomberg survey expect a decline in the second quarter, which would put Switzerland into recession.

Six months ago, the Swiss National Bank stopped defending the maximum exchange rate of 1.2 CHF to the euro, which led to a sharp strengthening of the franc and negatively affected their economy. 

The current forecast of the central bank is that the economy will grow by 0.9 percent this year, which is half of the forecasts before the release of the exchange rate.