Swiss GDP set for sharpest fall in decades

  • Swiss GDP to fall very sharply in 2020 in the wake of the measures being taken to contain the coronavirus.
  • Furthermore, the economy is only likely to recover slowly in 2021.
  • All data are available after The Expert Group on Economics has updated its economic forecast.

The Expert Group on Economic forecasts is expecting GDP adjusted for sporting events to fall by 6.7% in 2020 (March 2020 forecast: −1.5%) and unemployment to average 3.9% over the year as a whole. This would make it the biggest slump in economic activity since 1975.

A modest recovery should set in with the planned relaxation of health policy measures. However, losses of income caused by an increase in short-time working and rising unemployment as well as the considerable economic uncertainty will limit the amount of lost ground that private consumption will be able to make up in the second half of the year. Overall, private consumption could fall even more sharply than GDP in 2020.

The Expert Group is also expecting the global economy to mount only a sluggish recovery in subsequent quarters, with key trading partners, chiefly the major southern European countries, facing a particularly fierce battle against lasting consequences of the coronavirus crisis.

This will hit the segments of Swiss foreign trade that are sensitive to the economic cycle particularly hard. All in all, production capacity in Switzerland is likely to be significantly underutilised and uncertainty extremely high, resulting in a very sharp decline in investments as well as job losses.

Slow recovery in 2021

The Expert Group is expecting Swiss GDP to grow by 5.2% in 2021 (March forecast: 3.3%).

This would be a relatively slow rise from a very low starting point, meaning that the level of GDP seen at the end of 2019 would not yet have been reached by the end of the forecast period.

An improvement to the situation on the labour market is also expected to be hesitant at best: unemployment is set to rise further to 4.1% in 2021, with employment only likely to see a minimal rise.

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