Swiss economy performing better than expected

State Secretariat for Economic Affairs

Bern, 10.09.2020 - Interim assessment by the Federal Government’s Expert Group – September 2020 - The Expert Group will publish its next forecast on 12 October 2020. However, on release of the latest GDP figures for the second quarter, it is issuing an interim assessment. After the end of the lockdown, the economy has recovered more quickly than anticipated in the June forecast, meaning that growth for 2020 could be less negative than expected.

GDP fell by –8.2% in the second quarter of 2020, after decreasing by –2.5% in the first quarter. This is the biggest slump in economic output in decades. Nevertheless, Switzerland has made it through the crisis relatively unscathed so far in comparison with other countries.

Due to the comparatively early relaxation of the health policy measures, the economy has recovered noticeably since as far back as the end of April. Available indicators suggest that the recovery has so far been somewhat swifter than assumed in the June forecast, although there has not yet been a return to pre-crisis levels in many cases. This is true of foreign trade in goods, for example, which has grown significantly since May. Retail turnover and card payment figures also indicate that private consumption has recovered more quickly since businesses reopened than forecast in June, meaning that it may be less negatively affected in terms of the average for the year. The labour market has also seen a lower take-up of short-time working than expected so far this year. Since the end of the lockdown, the increase in unemployment has stabilised and the seasonally adjusted unemployment rate has only risen slightly.

If this development continues, GDP for 2020 is set to fall less sharply than forecast in June (–6.2%). As a result, the GDP decline could be in the order of –5%. This would be broadly in line with the positive scenario published by SECO for 2020*. The annual average unemployment rate is expected to be below 3,5% (June forecast : 3,8%).This is based on the important assumption that a further major spread of the coronavirus and severely restrictive containment measures do not materialise in Switzerland or in key trading partner countries.

For the rest of the year, the losses of income, considerable uncertainty and individual protective measures are likely to adversely affect economic recovery in Switzerland and abroad. This is likely to dampen GDP growth in 2021 (June forecast: +4.9% sport event adjusted). The risks also remain extremely high. A further severe spread of the coronavirus coupled with new health policy restrictions on the economy would lead to a renewed decline in economic output. As case numbers are rising once more, certain measures have recently been intensified again abroad (such as travel restrictions and temporary business closures). If this development worsens, another decline in foreign demand would be likely.

Notes
The economic forecast by the Expert Group will be published in October rather than September as usual. This is because the national accounts are being subjected to a comprehensive “benchmark” revision in September in line with international methods.** SECO and the Federal Statistical Office will publish the revised data on 28 September 2020. The updated forecast by the Expert Group will be released on 12 October 2020.

*https://www.seco.admin.ch/dam/seco/de/dokumente/Publikationen_Dienstleistungen/Publikationen_Formulare/Wirtschaftslage/
Konjunkturtendenzen/Spezialthema/kt_2020_02_exkurs_szenarien.pdf.download.pdf/KT_2020_02_Exkurs_Szenarien.pdf (in German)

** https://www.bfs.admin.ch/bfs/en/home/statistics/national-economy/national-accounts.assetdetail.9186424.html

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