The Swiss economy will soon be back to pre-crisis levels. The recovery is likely to be faster here than in neighboring countries, says KOF boss Jan-Egbert Sturm. He explains the reasons in an interview.
In autumn, GDP growth is likely to return to pre-crisis levels for the first time.
Switzerland is getting through the crisis better economically than our neighbors.
The reason for this is the rapid action taken in the first half of 2020.
However, there is also some luck involved, says KOF boss Jan-Egbert Sturm.
However, some industries have to fight for even longer.
The Swiss economy is expected to recover from the crisis this year. The ETH Economic Research Center (KOF) expects GDP to be back at pre-crisis levels in the third quarter of 2021. In an interview with 20 minutes, KOF Director Jan-Egbert Sturm reveals why Switzerland is doing better than the surrounding countries and which industries will have to fight for longer:
Mr. Sturm, are you going uphill quickly now?
That’s what I’m expecting. We have never seen the global economy collapse as quickly and as severely as it did in the first half of 2020. But even now the world economy is not looking as bad as many people might think. The last quarter of 2020 already went better worldwide than we feared. In addition, Switzerland is economically a little less affected by the pandemic than its neighboring countries.
As early as autumn this year, the economy will be back to pre-crisis levels. This is the forecast by the ETH Economic Research Center (KOF). For the entire year 2021, the economists expect a GDP plus of three percent. Consumption will begin to recover from the second quarter and will also reach the pre-crisis level by the end of the year. The Swiss economy was less affected by the second wave of pandemics than feared. According to the announcement, industrial companies in particular have proven to be resilient. They were already able to increase their production in the first quarter of the year.
In autumn 2020, the KOF still expected that the Swiss economy would not recover until 2022 – and the second wave could have dragged this development out even more. In February 2021, the forecast GDP growth was still only 2.1 percent. So the economy can look forward to Thursday’s new assessment.
What is Switzerland doing better?
The first half of 2020 was particularly decisive for the economy. And here Switzerland took on a pioneering role. We were one of the fastest countries in terms of economic measures. Short-time working, income replacement regulations and emergency loans quickly showed their effects. In the second phase, Switzerland was a little slower, but the economy had already learned how to deal with the situation better – the new measures hit us less hard than feared.
So can we thank the politicians?
Not only. Switzerland was also a little lucky. Compared to other countries, a large part of the added value in this country is based on sectors such as the pharmaceutical industry and financial services. These sectors came through the crisis rather well.
However, some industries are still on the ground – are you going fast now?
In part, yes. Many citizens were forced to save during the pandemic. This money can come into circulation again relatively quickly: consumption is picking up again. The service sector will benefit from this. However, the rapid recovery will not come for all sectors.
Who has to keep fighting?
Sectors like international tourism will suffer even longer. I do not think that very soon we will have the same air traffic as before the crisis. Such sectors are small enough in Switzerland that the economy as a whole can still recover.
The economy is recovering, but the mountain of debt is growing …
That’s so. Government debt is now back at the level it was 10 years ago and will grow a little more before we can reduce debt. The increase is nothing compared to other countries. In Germany and Austria the mountain of debt is currently about twice as high.
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