Government forecasts drop in GDP amid second coronavirus wave

Switzerland is likely to scrape through 2020 slightly better than expected. Keystone / Alessandro Crinari

The federal government’s Expert Group has forecasted a 3.3% decline in GDP for 2020. 

On Tuesday, the Expert Group released its forecasts for the country’s GDP. It expects it to decline this fourth quarter but is optimistic that “no real slump in the Swiss economy will materialise”.  

“Rising case numbers and the measures to combat the coronavirus will slow international economic development considerably in the winter half-year of 2020/2021, especially in Europe. In general, however, less dramatic containment measures have been taken than last spring and the overall economic impact is likely to be less severe,” said a government statement. 

Despite the predictions of the worst decline since 1975, it is still much better than the 3.8% drop predicted in October. The Expert Group also forecasts the likely average annual unemployment rate will be 3.2%. 

However, the outlook for 2021 is not looking as rosy as before. The experts predict that the spread of the coronavirus and associated restrictions will negatively affect the economy at the start of the year. They have revised their GDP growth forecast for 2021 downwards to 3% compared to 3.8% in October. The unemployment rate next year is expected to slightly increase to 3.3%. 

The GDP growth of 3% in 2021 hinges on a gradual return to normal from spring 2021, after coronavirus vaccines become widely available. 

“Under this condition, temporary above-average GDP growth would then be likely, as some delayed consumption expenditure and spending on investments would be made up and, in the course of the global economic recovery, exports of goods would pick up noticeably in particular,” said the government statement.