‘Very positive’ outlook forecast for Swiss economy

Sunnier times ahead? Guests sitting on a restaurant terrace in Lucerne, as seen in April Keystone / Alexandra Wey

The outlook for the Swiss economy for the middle of 2021 can be regarded as “very positive”, provided that the containment of the virus continues to progress, the KOF Swiss Economic Institute says.

The KOF Economic Barometer for May stands at 143.2 – which is 6.8 points higher than in April.

“The slight decline that the barometer underwent in the second half of 2020 has been replaced by continuing strong increases in the spring of this year. Once again, the barometer is well above its long-term average,” experts from the Swiss Federal Institute of Technology in Zurich (ETH Zurich) said on FridayExternal link.

According to the KOF, sharp increase was driven by the manufacturing sector and foreign demand, with an “additional positive signal” from the accommodation and food service sectors. It was not all positive news: KOF said slight negative impulses still came from private consumption.

Hotels and restaurants

Public life is gradually re-opening in Switzerland after the relaxation of Covid-19 restrictions – with more easing announced on May 26. Restaurants, for example, will be able to serve both indoors and outdoors from May 31.

HotelleriesuisseExternal link, representing hotels, said separately on Friday that there was still “a long way to go” before the sector recovered from the pandemic. It did not expect better results before next year, with the eventual return of foreign tourists.

Economic woes last year

The KOF analysis is in line with a previous prediction by the government: in March its experts said that after a weak start to the year, Switzerland’s economy should recover rapidly from a heavy coronavirus-driven slump to grow by 3% in 2021.

Switzerland’s economy shrank 2.9% last year as a result of Covid-19, the worst annual contraction since the aftermath of the oil crisis in 1975.  But official figures showed that the second wave in the autumn had a less harmful effect, with the economy growing 7.6% in the third quarter before slowing to +0.3% in the last three months of the year.