Pandemic forces companies to adjust their investment plans

(24.03.2021) The Covid 19 pandemic poses major problems for Swiss companies’ investment activities. According to the Economic Research Center (KOF), every fifth company lacks the necessary resources to invest. This means that growth in the total investment volume is hardly possible.

In autumn 2019, a third of the companies surveyed by the KOF planned to increase their investments in 2020, 46% wanted to leave them unchanged and 21% wanted to reduce them. In spring 2020, 27% of companies had already reduced their investment plans compared to 2019 and 32% intended to do so. Overall, the nominal decline in fixed investment over the course of 2020 is estimated at 9.2%.

A recovery is expected for 2021 with an average investment increase of 7.3%. The strongest growth can be observed among wholesalers and retailers (+ 12% and + 18%). Hotels and restaurants, on the other hand, are expecting an 18% decrease this year after cutting their plans by 28% in 2020.

Due to the financial situation of the companies, the KOF is exercising caution in its forecasts for 2021. 22% of the companies surveyed stated that their investments are slightly or significantly influenced in a negative direction by their financial resources. Despite major differences between the industries, the majority of companies whose financial situation has deteriorated since the beginning of the pandemic are in the majority. The investment freeze could slow the recovery.

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