Swiss Economy to Grow 3% in 2021, Says SECO

Forecasts for 2021 and 2022

                The State Secretariat for Economic Affairs (SECO) announced its forecasts of Gross Domestic Product for this and next year. For the first quarter of 2021 GDP is likely to drop significantly as in December last year restrictions were reintroduced which caused harm for the economy. But then it will pick up again and for the whole year a growth of 3% is expected. Meanwhile in 2022 Swiss economy is foreseen to grow by 3.3% - this is better forecast than one given in December, of 3.1%.

Rapid Recovery

                After slow Q1 a rapid recovery of the economy is expected as public health measure are being eased and vaccinations programme is underway. Shops are already reopened, and further easing of restrictions is expected form March 22 on, if the pandemic situation is good. “Should the epidemiological development allow the gradual easing of coronavirus measures as intended, the domestic economy should recover very quickly,” SECO said in a statement. “Consumer opportunities that were largely unavailable in the winter months would re-emerge and lead to turnover rising again”, it added. Also, the global demand should trigger better result of Swiss export sector. Investment on production capacity will increase as well, claims SECO. In such circumstances if all goes well, the swiss economy will come back to the pre-crisis level around the end of this year.

Higher CHF exchange rate

                However, at the same time the momentum can be destroyed by the weaker CHF exchange rate. Recently Swiss franc exchange rate has fallen to the lowest potin versus euros since 2019. Investors decided to abandon safe haven positions – and sell Swiss francs among others, to get ready for higher prices and economic rebound around the world. As Swiss Central Bank predicts the output won’t be back to its pre pandemic level before 2022.

Worst Year Since 70s

                Last year the Swiss economy has been in worst state since 1975. The GDP contracted by 2.9%, but still it was less than in some neighbouring countries. According to experts, the less strict measures than in other European countries contributed to better economic situation in Switzerland. Figures show that the second wave of the pandemic had lesser impact on the economy. In the third quarter it grew 7.6%, before slowing down in fourth quarter with growth of 0.3%. The growth reported at the end of last year was quite unexpected as experts predicted stagnation. The growth was due to foreign demand for goods that offset impact of reintroduction of public health measures. Among the worst affected industries were the hospitality sector with contraction of 20.8% and arts, entertainment and recreation branch that fell down 7.7%. Household spending went sharply down last year with many facilities, shops closed for some part of 2020. The unemployment hit the highest level in a decade with 3.7% by the end of January this year.