Economic Forecast 2018, by Prof. Dr. Aymo Brunetti and Dr. Daniel Kalt
The questions that shaped this year's event "Economic Forecast 2018" focused on the current state of the global economy, the risk of overheating financial markets, as well as the great importance of a normalization of the monetary policy.
After two short introductions by Prof. Dr. Aymo Brunetti and Dr. Daniel Kalt, the discussion, moderated by Prof. Dr. Urs Wälchli, challenged their individual perspectives, and inquired into the major economic risks. On aggregate, the Swiss economy has weathered the storms of the past very successfully. While the economic outlook is good for the near future, there are significant risks lurking from the extremely expansionary monetary policy of the past. In particular, failure to normalize the monetary policy in due time could lead to significant distortions on the global financial markets. Since this is a global issue, the Swiss National Bank alone will not be able to contain these risks.
“Statistics show that most countries recovered fairly well from the Great Financial Crisis in 2007/2008. Exempt are some nations in the Eurozone, such as Italy or Greece, who are still far from reaching pre-crisis GDP levels. Forecasts are remarkably favorable for the World Economy and Switzerland. The most important risks for the outlook are linked to the overdue normalization of monetary policy. As central banks are in unchartered territory with cutting back from such extreme levels of liquidity, this process can lead to significant volatility that could endanger the medium-run outlook."
Prof. Dr. Aymo Brunetti, Universität Bern and Rochester-Bern Executive Programs, Professor of Economics
"Ten years after the financial crisis, most equity markets have surpassed their pre-crisis levels and fundamental valuations are historically high. There are even signs that the ultra-loose monetary policy has led to asset price bubbles in some areas. Although equity markets are still supported by solid corporate profit growth, tightening the money supply is likely to increase volatility. Besides some obvious geopolitical risks we see policy errors in the monetary policy area as the greatest risk to markets over the course of the next two years."
Dr. Daniel Kalt, UBS, Chief Economist Switzerland
Event: Panel Discussion: "Economic Forecast 2018"
Speakers: Prof. Dr. Aymo Brunetti and Dr. Daniel Kalt, moderated by Prof. Dr. Urs Wälchli
Date: Tuesday, January 16, 2018
Location: Universität Bern, Kuppelraum, Bern