Gross domestic product in the 4th quarter of 2020: a slowdown in recovery

Bern, 26.02.2021 - Switzerland’s GDP growth slowed to 0.3 % in the 4th quarter after reaching 7.6 % in the 3rd quarter.* Major losses were recorded in the services directly affected by the tightening of the containment measures. Other industries continued to recover. On the whole, the second wave of the coronavirus until the end of 2020 had much less of an impact on the economy than the first wave did last spring.

Economic recovery was interrupted in certain sectors during the 4th quarter. In Switzerland, capacity restrictions and business closures were ordered to contain the coronavirus. International travel also declined sharply, which was detrimental to tourism. Value added in accommodation and food services (–20.8 %), as well as in arts, entertainment and recreation (–7.7 %), fell considerably after the temporary easing of restrictions during the summer months. This was also true in transport and communications (–0.5 %), where the decrease in value added reflected the reduction in mobility among the Swiss public. Finally, a decline was reported in healthcare and social work (–0.7 %). The decreases in these sectors are therefore far less severe than those experienced in spring 2020. Nonetheless, the economy is still feeling the impact of the second wave of the coronavirus and the measures implemented to contain it in the 1st quarter of 2021.

Private consumption contracted considerably (–1.5 %) in the 4th quarter. While spending on hospitality and leisure services slumped, expenditure on food and other goods such as electronics rose. All in all, private consumption fell less sharply than it did during the 1st quarter at the start of the pandemic, despite the second wave of the coronavirus. As such, trade (+1.5 %) posted a positive result for the quarter. Financial services (+0.7 %) and business-related services (+0.4 %) also grew. On the whole, then, the service sector only experienced a slight downturn in terms of value added.

In construction (+0.4 %), value added picked up in line with investment in construction (+0.1 %). Investment in equipment (+1.9 %) continued to recover and also contributed to the stabilisation of the domestic economy. Many companies increased their investments again after postponing them last spring. Government consumption (+2.3 %) stepped up markedly due to additional, coronavirus-related spending. Overall, final domestic demand (–0.2 %) declined only slightly in the 4th quarter, which was reflected in a slight decrease in imports**
(–0.6 %).

In contrast to the first half of 2020, international supply chains experienced very little interruption in the 4th quarter. Manufacturing (+1.4 %) enjoyed renewed growth buoyed by the strong resurgent demand in major economies in Asia. Various export categories, including watchmaking and precision instruments, as well as machinery and metals, continued to recover from the slump in spring 2020. While exports of goods*** (–1.0 %) declined overall, this was solely due to a negative development in merchanting. Exports of services (+0.4 %) reported slight positive growth.

Initial results for 2020
According to the available provisional results, real GDP shrank by 2.9 % in 2020, much more severely than at the time of the financial crisis in 2009 (−2.1 %). An even sharper decline was recorded in 1975, in the wake of the oil crisis.

The service sector was hit particularly hard by the crisis, and private consumption fell to a degree never seen before. Conversely, the contractions of manufacturing and exports were less pronounced than they were during the financial crisis.

Notes
Further information on GDP in the 4th quarter and in 2020 as a whole can be found in the spring 2021 edition of “Konjunkturtendenzen” at www.seco.admin.ch/gdp.
The coronavirus pandemic also has an impact on the production of statistics. As recommended by European statistical office Eurostat, the basic data and methods were subjected to an in-depth check for the current GDP calculation to avoid distorting effects due to the coronavirus pandemic.**** Nevertheless, in view of the current data situation it is possible that in the coming quarters more significant revisions than usual will become necessary.

* Real percentage change compared to the previous quarter.
** Goods and services excluding valuables.
*** Excluding valuables.
*** https://ec.europa.eu/eurostat/data/metadata/covid-19-support-for-statisticians.


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Last modification 28.01.2021

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