Switzerland Economic Outlook

March 31, 2020

Although the KOF barometer, strong labor market, and manufacturing and services PMIs had suggested improving dynamics at the start of the year, the global pandemic has quickly reversed the narrative. Restricted public life, which is set to run through mid-April, will take a sharp bite out of consumer spending in H1. Moreover, given the openness of the economy and as Switzerland’s main trading partners have been largely locked down, merchandise exports as a whole will likely be depressed in H1, particularly for exports of manufactured goods. Pharmaceutical exports, however, should be less affected by shrinking global demand. The tourism sector will also be hard hit during the pandemic. In response, the government has introduced two economic relief packages totaling around CHF 42 billion (roughly 6% of GDP). The spending bills offer wage subsidies for furloughed workers; government-backed bank loans for small businesses; and financing options for badly affected companies.