The economy is expected to shrink 3.5% in 2020, according to bank experts who had forecast a decline of just 1% previously.
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Credit Suisse economists have lowered their economic outlook for Switzerland. Now, they expect a 3.5% drop in gross domestic product (GDP) this year. The previous forecast was -1.0%.
The start of the easing of measures taken by the Federal Council should allow the economy to start to recover, economists at the two sails said in an analysis on Thursday evening. The recovery is expected to be slower than expected so far, especially for the export-oriented industries.
The Federal Council’s announcements are in line with the expectations of Credit Suisse economists who thought that the toughest measures would be lifted after two to three months. The government is putting priority on reducing new contamination. Certain restrictive measures will therefore remain in force longer.
The effects of the coronavirus crisis are increasingly felt in statistics. The closure of ski resorts and borders in March resulted in declines of sometimes more than 90% in tourism turnover. Unaffected by travel restrictions, air cargo plunged 40% in March.
In the end, CS experts estimate that consumer demand is currently around 20% lower than it was before the measurements. Calculated over two months, these measures cost around 12 billion francs or 3.1% of value creation.
After the measures are lifted, part of consumption will normalize, thanks in particular to measures such as short-time working and bridging loans. Despite this, and thanks to the increase in purchasing power linked to negative inflation, private consumption should fall by 2.1% on average this year.
Public consumption is expected to increase by 3%. Foreign trade is expected to decline 4% due to the global economic downturn and the machinery industry is expected to suffer the most. The economists of the CS also forecast a drop in investment, without a massive decline, however.
For 2021, experts expect an “impressive” recovery of 3.5%, but this will not entirely erase the decline in 2020. It will be decisive to be able to avoid new restrictive measures in the event of the second wave of the pandemic .
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