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Easing cycles have further to run

In keeping with our bearish view on the euro-zone, our forecasts for GDP growth in Switzerland and the Nordic economies over the coming years are generally well below consensus. Switzerland is most exposed to the industrial woes in Germany, and we expect deflation to return there next year as the economy flirts with recession and safe-haven demand drives the franc higher. Meanwhile, although house prices are creeping up again, growth in Sweden will slow in 2020 as residential investment declines and export growth weakens. The persistence of global trade tensions is likely to push the krona to fresh decade-lows over the next six months.

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