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Swiss economy recovers to near pre-pandemic levels

people eating out
People on the terrace of an Alpine restaurant on July 10 Keystone / Urs Flueeler

Switzerland’s economy grew by 1.8% in the second quarter thanks to stronger household consumption as the easing of Covid-19 restrictions helped reverse earlier declines.

“In the second quarter, total GDP [gross domestic product] was only 0.5% lower than the pre-crisis level seen in the fourth quarter of 2019,” the State Secretariat for Economic Affairs (SECO) said in a statementExternal link on Thursday.

The economy had contracted by 0.4% in the first quarter of 2021 and by 2.4% in 2020. But the relaxing or lifting of Covid-19 restrictions in spring help boost private spending and services like catering and domestic tourism.

Accommodation and food services (+48.9 %) made a clear recovery after setbacks in the winter, SECO said. Arts, entertainment and recreation (+52.9 %) also saw strong growth thanks to fewer restrictions.

Manufacturing and the export of goods also had marked increases, although at lower rates than during the beginning of the year. Financial services (–0.7 %) were the only sector to register a noticeable decline.

More recently lower industrial growth and global trade have slowed sectors of Swiss industry, SECO said.

“Exports of cyclical industrial goods, such as machinery and precision instruments, decreased. In contrast, the chemical–pharmaceutical industry was again able to expand strongly,” it noted.

Future?

The Swiss government raised its economic growth forecast in June. It hopes annual GDP growth will reach 3.6%, up from its 3% forecast in March.

However, Switzerland still faces a “very worrying” fourth wave of Covid-19. The finance ministry has warned that further waves of the virus could pose significant risks to public finances and the economic recovery.

Swiss government said on August 11 that due to the uncertain virus situation it was still too soon to lift remaining pandemic restrictions, such as the compulsory wearing of masks in public spaces. It will re-evaluate the situation in September. It has also decided against extending the use of the Covid certificate (which provides proof of vaccination, recovery or a recent negative test result) for the time being.

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