Economic contraction in 2020 less severe than feared

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Economic contraction in 2020 less severe than feared


According to Seco, GDP will shrink by 3.8% this year. If this decline is the strongest since 1975, it is less marked than the decline of 6.2% initially estimated.


Seco also expects an average annual unemployment rate of 3.2%, against a forecast of 3.8% last June.


© Keystone
Seco also expects an average annual unemployment rate of 3.2%, against a forecast of 3.8% last June.


The Swiss economy has withstood the coronavirus pandemic and should even be able to return to its pre-crisis level at the end of next year, according to the State Secretariat for Economic Affairs (Seco). The recovery momentum should however subside thereafter.

The Swiss gross domestic product (GDP) will decline by 3.8% in 2020, the largest decline the country has experienced since 1975, according to indications provided by Seco in a press release on Monday. The new forecast for Switzerland is much better than the outlook established in June, which suggested a decline to 6.2%.

By way of comparison, the United States should post a GDP down 4.2% this year while that of the euro zone should plunge -8.1%. China could just get its head out of the water (+ 1.7%).

Seco also expects an average annual unemployment rate of 3.2%, against a forecast of 3.8% last June, still corresponding to an addition of 50,000 unemployed people compared to the year. last.

A solid recovery …

This renewed optimism is based on a solid recovery from the end of April with the end of the containment measures put in place by the federal authorities. According to Seco, the first half of 2020 was thus marked by a strong return to consumption and investments, with limited recourse to partial unemployment.

But this improvement does not concern all areas of the economy. The world of hotels and restaurants has been severely affected, even though travel restrictions and therefore the increase in domestic tourism have helped to limit losses. Those on the other hand who are dependent on international tourism or major events, “have experienced a weaker recovery,” according to Seco.

Therefore, “the economic recovery remains limited and most sectors have still not returned to the figures of last year”, indicates the institution.

… but slowing down in 2021

The Swiss recovery is expected to continue next year, but at a slower pace. The State Secretariat for the Economy expects GDP to grow by 4.2% in 2021 (3.8% excluding the sporting events component), setting a return to pre-crisis levels. The job market, on the other hand, will find it more difficult to recover due to “very weak” growth, the institution indicates.

In general, the international recession and persistent uncertainty will weigh on the Swiss economy next year.

Difficult for Seco to say more, given the myriad of potential scenarios. The discovery and distribution of a vaccine could, for example, herald a rapid recovery, in Switzerland as elsewhere in the world. A return to containment measures, on the contrary, would darken the outlook for growth, with “the loss of jobs and the bankruptcy of companies in large numbers”.

Seco also mentions the appreciation of the Swiss franc, international trade disputes and the risk of a severe correction in real estate as the main threats to the Swiss recovery.

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