Swiss Economic Recovery Delayed by Second Virus Wave

(Bloomberg) -- The Swiss economy will shrink this quarter and recover less quickly than previously expected in 2021 as renewed restrictions to stem the spread of Covid-19 in Europe and elsewhere weigh on global momentum.

Switzerland’s State Secretariat for Economic Affairs sees gross domestic product expanding 3.2% next year, slower than the 4.2% previously forecast.

It said the situation is extremely uncertain and further waves of the pandemic and containment measures would “increase the probability of second-round economic effects such as large-scale job cuts and corporate insolvencies.” The risks linked to higher government and company debt would also rise.

Like many of its neighbors, Switzerland suffered its deepest recession in decades due to Covid-19, with hopes for an economic revival pinned on the rollout of vaccines. Switzerland’s drive to immunize the public may begin in January.

Still, the economy has been less severely bruised by the crisis than France or Italy’s. The franc has also steadied against the euro after an appreciation earlier in the year that forced a dramatic intervention response from the Swiss National Bank.

The central bank is forecast to keep its policy rate unchanged at -0.75% on Thursday and repeat its currency pledge.

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