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The economic recession in the first half of this year was unprecedented. There was no financial crisis, no oil price shock or stock market crash was to blame. But the tiny corona virus. It hurts our economy more than anything.
At the height of the crown crisis, gross domestic product (GDP) collapsed by 8.2 percent in the second quarter. Then there was an intermediate outbreak, a quick recovery. Credit Suisse economists note that Swiss private households currently spend about two-thirds of the money they saved during closing. Other advantages: the extension of the reduced working hours and the Covid-19 bridge loans.
Slower growth again after an intermediate sprout
A new study by leading bank CS on the state of the Swiss economy now shows that the recovery is losing momentum after the intermediate streak. Your economists expect the unemployment rate to rise from 3.3 percent today to around 4 percent by mid-2021. This, of course, slows down household consumption. Additionally, a “meager pay round” can be expected for employees.
According to CS, the coronavirus keeps the world economy in suspense for longer and depresses the profits of companies. “But we are not assuming another blockade in the entire area,” the study continues. The fact is that the industry has hit rock bottom and the demand for equipment and machines is increasing. The pharmaceutical and chemical sector in Switzerland is an important pillar.
Corona massively slows immigration
The migratory balance of the permanent resident population – immigration minus emigration – was 53,000 people in the year before Corona. For the current year, CS expects around 50,000. This is because the Corona crisis is not only leading to a decrease in immigration, but fewer people are moving from Switzerland as well. In addition, it is currently difficult to find work abroad.
As long as the job market does not recover, which will take some time, immigration is likely to remain subdued. But lower immigration numbers can already be felt in the form of lower demand in the real estate market, according to the CS study.
Economists at the big bank expect a further decline in net immigration in 2021. They will reach a level of 45,000.
“This would mean that the migratory balance would fall below 50,000 people for the first time since the introduction of full freedom of movement in June 2007.”
What does immigration look like in the long term?
The CS assumes that the emerging wave of retirement will leave a large gap in the labor market for the baby boom generation with high birth rates. This should be partly offset by hiring staff from abroad.
In the long term, economists expect an average net migration of just over 50,000 as the most likely scenario.
