(Bloomberg) -- The Swiss economy will shrink less than expected this year, thanks to a strong recovery in consumption and investment after pandemic restrictions on activity were relaxed.
Switzerland’s State Secretariat for Economic Affairs sees output contracting 3.8% this year, less than the 6.2% predicted in June. The government’s economists last month signaled the economy was less weak than expected.
“The Swiss economy should continue to recover at a moderate pace,” as long as there are no new closures of borders and businesses, the SECO said in a statement on Monday.
“A ‘hard’ Brexit, which appears more likely based on recent events, would be another blow to the fragile economy,” it also said. “The risk of upheaval on the financial markets and further upward pressure on the Swiss franc also remains high.”
Economic activity in Switzerland picked up briskly over the summer after restrictions on businesses and travel were lifted. Yet, the crisis is far from over -- generous furlough programs are keeping a lid on unemployment and Covid-19 infections rose rapidly last week.
A Bloomberg survey of economists published on Monday was less upbeat, with the median forecast for a contraction of 5% this year.
The global pandemic roiled financial markets and caused appreciation pressure on the haven franc. The SNB spent 90 billion francs on interventions during the first six months of this year to keep the currency in check.
The Swiss economy is expected to grow 4.2% next year, the SECO said.
(Updates with Bloomberg survey data in sixth paragraph)
©2020 Bloomberg L.P.