Swiss Economy Can Grow by 4% in 2021, 2022, Says Govt Chief Economist

Swiss Economy Can Grow by 4% in 2021, 2022, Says Govt Chief Economist

13 January 2021

The Swiss economy can recover this year and report even 4% of growth for 2021 and 2022, a double of its usual rate, according to the Swiss government chief economist.

Optimistic Scenario

              The Swiss government chief economist, Eric Scheidegger, told newspaper NZZ am Sontag that the economy of the country can recover to post even 4% growth of GDP in 2021 and 2022, which would be double of normal rate of growth. The positive scenario, according to the expert, would see the recovery starting already in the middle of 2021. Due to the fact that Switzerland’s economy is very much relying on export, the global recovery would strongly help it. Scheidegger, who is the head of the Economic Policy Directorate at the State Secretariat for Economic Affairs (SECO), said that: “In our positive scenario, we expect a strong recovery in the global economy from the summer onwards. In this case, Switzerland could achieve growth of around 4% in both 2021 and 2022.” Meanwhile, official forecast made by SECO foresees GDP at plus 3% in 2021 and up 3.1% in 2022, after the decline of 3.3% in 2020, which was the worst result since 1975. Typical ratio of growth is at 1.7% per year, as Switzerland is one of the wealthiest countries in the world and its economy grow mainly due to financial services, pharmaceuticals, export, for instance, to the European Union or China.

Downturn in 2020

              In 2020 the worst decline in more than 40 years was observed due to the COVID-19 pandemic and lockdown which meant many companies had no orders at all and service sector was shut down completely for some time. The Swiss economy lost 72 billion Swiss francs (around 81.32 billion dollars as per latest CHF/USD exchange rate). The Swiss government launched economic aid program, that consumed 5% of the GDP, but prevented worse decline of the GDP. Not helpful for export and economy was also the very good exchange rate of CHF, which was triggered by difficult times and investors being much eager to buy Swiss francs, considered a safe-haven currency. According to Scheidegger, the economy should come back to pre-crisis level by the end of this year as companies will be again making investments: “Alongside consumption, investment is the second key driver: companies typically hold back in this respect during crises. But as soon as they have planning certainty again, many companies will focus on the upswing.”

Unemployment Rate for 2020

              In other economy-related news, the annual unemployment rate was at 3.1% in 2020, SECO published, up from 2.3% in 2019. According to Boris Zürcher, head of SECO's Labour Directorate: “An average unemployment rate of only 3.1% for 2020 is to be welcomed under the circumstances,”, as the predicted figure, back in spring, was 4%. At the end of last year number of job seekers went up to 260,000, a 34.9% increase from 2019, the highest one since February 1997. As data shows the unemployment first sharply went up in middle of March in the peak of the pandemic, then slowed down over summer to again accelerate by the end of the year. As previous reports disclosed especially many cross-border workers lost their job due to the pandemic.

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