Corona crisis: Seco expects significant recession
The Swiss economy will have to reckon with a continuing Corona crisis in the current year. This is now also the assumption of the Confederation's economists.
The Corona crisis is not a short-lived event. Specifically, the group of experts at the State Secretariat for Economic Affairs (Seco) estimates that gross domestic product (GDP) will shrink by 1.3 percent this year. In its last assessment last December, it had still assumed growth of 1.7 percent.
If the international sporting events planned for the current year are not held, the minus would be as much as 1.5 percent, Seco announced on Thursday afternoon. Either way, Switzerland will fall into recession, according to the forecast.
Previously, other forecasting institutes had predicted a similar development for the current year. The most recent was the Swiss National Bank in the morning.
Exports slump
Seco explained the forecast by saying that the Swiss economy was affected by the spread of the new coronavirus through various channels. On the one hand, the virus is having a drastic impact on important trading partners, which is leading to a drop in sales in export-oriented sectors.
Exports are now forecast to fall by 4.9 percent, after an increase of 3.0 percent had been expected in December. The impairment of supply chains and the stronger Swiss franc also had a negative impact.
On the other hand, Switzerland itself was directly affected by the virus and the measures adopted as a result. Numerous companies would have to temporarily restrict or cease operations. As a result, spending on leisure and travel, but also on durable consumer goods, would temporarily collapse. Seco therefore expects consumption to decline (-0.5%).
Due to the uncertainty, companies would also invest significantly less (equipment investment: -5.0%) and cut jobs. As a result, the unemployment rate is expected to rise to 2.8 percent in the current year.
Resuscitation in the second semester
Provided the pandemic stabilises in the course of the year, a "revival of the economy" can be expected in the second half of the year and in 2021, Seco estimates. Growth of 3.3 percent is expected.
However, the high value should not obscure the fact that even with this, the level would no longer be reached as if the Corona crisis had never taken place.
As usual, Seco also emphasises the forecast risks in its communication. Uncertainty is currently "extraordinarily high". An even sharper slump is to be expected if the virus spreads more widely and even stricter restrictions on economic activity become necessary as a result. (Source: si)
