OECD forecasts drop in Swiss economic growth in 2020

Restrictions imposed to fight the Covid-19 pandemic, such as store closures, will have a major impact on Swiss GDP in 2020, the OECD predicts. Keystone / Laurent Gillieron

Even though restrictions aimed at slowing the spread of Covid-19 were less strict than in other countries, Switzerland will still see its GDP fall by 7.7%, if the pandemic is contained by summer.

Gross domestic product will not rebound until 2021, according to the forecast published by the Organisation for Economic Cooperation and Development on Wednesday.

Despite a shorter lockdown period than other countries, household consumption and investments have collapsed, the Paris-based organisation said. Private spending is expected to fall by 6.8% in 2020 and rebound by nearly as much in 2021.

The OECD predicts exports will bear the brunt of a slow economic recovery and the appreciation of the Swiss franc. It forecasts a drop of 7.6% in exports in 2020 and a rebound of 4.2% next year.

A second wave of the coronavirus, however, could spell even more trouble for the economy, with an increased risk of bankruptcies, job losses and lower investment. In such a scenario, GDP could fall by 10% in 2020 and recover by only 2.3% in 2021, the OECD said.

However, the country’s low level of public debt provides fiscal leverage for authorities to support companies, especially small and medium-sized firms, which have been severely affected by Covid-related closures, it added. Many businesses have been able to re-open their doors beginning in May, after the federal government eased restrictions.