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The crown crisis will trigger a deep recession in Switzerland. ETH Zurich’s economic research agency KOF expects gross domestic product (GDP) to fall 5.5 percent in the current year.
In its last assessment eight weeks ago, the KOF had assumed a small growth of 0.3 percent. The Swiss economy is expected to rebound 5.4 percent next year, KOF said on Friday.
Particularly affected service sector
In the second quarter of 2020 in particular, a massive drop in GDP can be expected, the KOF experts explained. These estimate the least for the months of April to June at “almost 10 percent.”
The growing number of coronavirus diseases necessitated drastic containment measures in mid-March. That is why, unlike previous recessions, this time national sectors are also seriously affected, especially services, wrote the KOF.
Sharp decrease in tax revenue
The crisis will also leave its mark on the labor market: the average unemployment rate should reach 4.7 percent by the end of the year and an average of 3.8 percent for the year. For comparison: in 2019, the annual unemployment rate was 2.3 percent.
At the same time, the federal government, municipalities, and cantons should expect a sharp decline in tax revenue this year and in the years to come. The KOF sets the defaults to over CHF 25 billion.
