Swiss GDP takes hit from Covid-19

Private consumer spending fell by 3.7% in 2020, the sharpest decline in Switzerland since the Second World War. © Keystone / Gaetan Bally

Gross domestic product fell by 2.4% in 2020 as a direct consequence of the global pandemic affecting certain sectors of the Swiss economy.

The health crisis caused a big drop in both domestic demand and international trade, the Federal Statistical Office said on Thursday as it revealed initial results for 2020.

Private consumer spending fell by 3.7%, the sharpest decline in Switzerland since the Second World War. Spending was down in sectors like restaurants and hotels, transportation, clothing, leisure and culture. People spent more on food and, to a lesser extent, on health.

Trade in services also experienced a sharp decline, falling by nearly 15%.

Public spending, on the other hand, rose by 3.5%.

Nearly balanced budget for 2022

The statistics were released on the same day the federal government published its detailed budget plan for 2022. After two consecutive years of high expenditures related to fighting Covid-19, 2022 looks like a “return to normal” for fiscal policy, the Federal Council (executive body) said in a statement.

Expected revenue for next year is set at nearly CHF79 billion ($86 billion), an increase of 3.3%. But spending will be down by 4.8%, to CHF78 billion, in part due to a reduction in pandemic-related spending. The government is planning an extraordinary expenditure of CHF925 million outside the ordinary budget to deal with the health crisis, including the purchase of vaccines.

It expects 2022 to end with a budget surplus of CHF600 million, money that will be used to reduce the debt.