SNB Chair Thomas Jordan warned yesterday that Switzerland could be heavily hit if full-scale trade war broke out. He said “All countries would feel the detrimental effect of a global trade war, but small, open economies such as Switzerland would be among those hardest hit.”
Additionally, the current trade tensions have already made it more difficult to conduct monetary policy. He noted, “a wave of protectionism would create a lot of uncertainty, be it with regard to the short-term development of the real economy and prices, or with regard to the longer-term macroeconomic context.” And, “the risk of monetary policy mistakes would increase, at least while the economy is in the process of adapting to the changed market conditions.”
Jordan also asked the question that the Swiss Franc could be “sought as a safe haven in the event of a trade war”, and Swiss could “face particularly strong exposure to a severe contraction in world trade”.
