Better Economic Situation in Switzerland After Lockdown Than in Neighbouring Countries04 September 2020
As data for the second quarter shows, Switzerland’s economy was less impacted by coronavirus lockdown than in neighbouring countries.
Better Than Neighbours
Economic data shows than in the second quarter gross domestic product fell 8.2% in Switzerland, the most in 30 years, but still smaller drop than in neighbouring countries. In Germany, the decrease of GDP is at 9.7%, in France and Italy double-digit numbers of slump in GDP are expected. The decrease of Swiss GDP was lower than forecast predicted – 9% was foreseen by economists. Data on GDP for second quarter around the world shows how huge impact on the economies had the coronavirus pandemic and imposed by many governments lockdown aimed at limiting spread of the virus. Many countries introduced aid packages for business, but it was not enough to stop losses in GDP. It remains to be seen how quickly economies can recover and what will be the outlook for unemployment with many jobs lost around the world.
Deficit for 2020
As some countries deal with huge economic and financial problems, the deficit in Switzerland’s budget is expected to be at the end of the year much smaller than previous estimation of 30 billion francs – as made by Finance Minister Ueli Maurer. That is the stance of Credit Suisse Group AG’s experts. In a response to virus Swiss central bank didn’t further cut rates as they are already at world’s lower record level. Instead it made more currency interventions – like buy euros and other foreign currencies – to stop CHF exchange rate from getting overvalued, which could additionally hurt the economy.
Even though observed losses in GDP are smaller than in Germany, France, Italy, still Switzerland is in deep recession, with the highest slump of GDP since 1980. Consumer spending went down by 8.6% in Q2, manufacturing contracted by 9%, equipment investment by almost 12%. Generally the economy is excepted to shrank by 6% this year.
Limited losses, comparing to other countries, are attributed to Switzerland imposing less sever restrictions during lockdown than neighbours, as well as good situation of pharmaceutical industry, that it reported growths. Also the country less rely on tourism than France or Italy, so closing of borders and limits in travelling put less burden on its economy. Pharmaceutical industry recorded growths, including huge companies like Roche Holding AG and Novartis AG. The better situation in the country comparing to other European countries, means demand for aid from government by companies and employees has been lower than expected.
It Can Get Worse…
There is still risk that situation might get worse, and GDP might contract more than expected by the end of the year. In many countries there is now observed a second wave of infections of COVID-19 and again some restrictions are being introduced. In Switzerland large gatherings are banned and shoppers need to wear masks.