Swiss Flag Financial Risk With Economy in Deepest Dive Since 70s
The Swiss economy is expected to suffer its biggest contraction since the mid-1970s this year, with financial stability risks increasing globally due spiraling corporate and state debt.
“The risk of upheaval on the financial markets and further upward pressure on the Swiss franc is high,” Switzerland’s the State Secretariat for Economic Affairs said in a statement on Tuesday.
Like many advanced economies, momentum in Switzerland tanked after theaters, shops and restaurants got shut down in a bid to control the outbreak.
Adding to the headaches for Swiss officials is the currency. The franc, which investors buy as a haven, appreciated to a five-year high against the euro during the crisis, a further damper for the economy.
The SECO foresees a 6.2% economic contraction in Switzerland this year and growth next year will recover to 4.9%.
While activity in Switzerland is beginning to recover, unemployment is also rising and many neighboring countries, who are key trading partners, have felt the impact of the pandemic more severely.
Another flareup of the outbreak “would slow the recovery and increase the probability of more serious second-round economic effects such as large waves of lay-offs and bankruptcies,” the SECO said.
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