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.
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.
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”.
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.
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.
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.