The corona crisis will trigger a deep recession in Switzerland. The economic research agency KOF of ETH Zurich expects the gross domestic product (GDP) to fall by 5.5 percent in the current year.
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In its last assessment eight weeks ago, the KOF had assumed small growth of 0.3 percent. The Swiss economy should recover by 5.4 percent next year, the KOF said on Friday.
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Service sector particularly affected
In the second quarter of 2020 in particular, a massive slump in GDP can be expected, the KOF experts explained. These estimate the minus for the months of April to June to “almost 10 percent”.
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The increasing number of coronavirus diseases made drastic containment measures necessary in mid-March. That is why, unlike previous recessions, this time domestic sectors are also badly affected, especially services, the KOF wrote.
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Sharp decline in tax revenue
The crisis will also leave its mark on the labor market: the average unemployment rate should reach 4.7 percent by the end of the year and average 3.8 percent for the year. For comparison: in 2019 the annual unemployment rate was 2.3 percent.
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At the same time, the federal government, municipalities and cantons should expect a sharp decline in tax revenues this year and in the next few years. The KOF puts the defaults at more than CHF 25 billion.
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