How the coronavirus crisis will hit Switzerland’s economy in 2020

Switzerland's central bank warned Thursday that the wealthy Alpine nation would face a "sharp recession" due to the coronavirus crisis.

How the coronavirus crisis will hit Switzerland's economy in 2020
A shuttered watch store in Lausanne. Photo: FABRICE COFFRINI / AFP

Switzerland's economy is expected to shrink by around six percent this year.”

This would be the strongest decline since the oil crisis in the 1970s,” the Swiss National Bank (SNB) said in a statement detailing its quarterly monetary policy decisions.

“Most economic indicators have deteriorated drastically in recent months,” the bank said, pointing among other things to a sharp rise in unemployment levels, and “record low” consumer sentiment.

During the first quarter of the year, Switzerland already saw its gross domestic product (GDP) shrink 2.6 percent, the bank said.

The worst economic impact of the measures put in place to halt the spread of COVID-19 had come after that, in April, it added.

IN NUMBERS: What is the coronavirus situation in Switzerland now?

“The decline in GDP is therefore likely to be even stronger in the second quarter,” it said.

While economic activity has begun picking up again since late last month, when most restrictions were lifted, the SNB warned that, as in other countries, it was expecting “only a partial recovery for the time being.”

The bank said it was clear that “GDP will not return quickly to its pre-crisis level,” adding that overall, “GDP is likely to contract by around six percent this year.”

But things look brighter after that: the bank said it expected to see an “economic revival” in the second half of the year, which would likely be reflected in “clearly positive growth” next year.

“There is a great deal of uncertainty,” central bank chief Thomas Jordan acknowledged during a press conference in Bern.

“There is the hope that we have passed the worst,” he said, adding though that “a difficult phase of the recovery lies ahead of us.”

READ: Where can you travel to from Switzerland – and when?

The central bank meanwhile decided Thursday to leave its key rates unchanged, with demand deposits remaining at -0.75 percent.

It also said that in light of the coronavirus crisis, it was providing the banking system with additional liquidity to help support the supply of credit to the overall economy.

“We have therefore made substantial interventions,” Jordan said, adding that the situation had “eased somewhat”.

The bank also significantly revised down its inflation outlook, amid “significantly weaker” growth prospects and lower oil prices.

It now expects inflation to be -0.7 percent this year, compared to a previous forecast of -0.3 percent, and -0.2 percent next year, compared to 0.3 percent previously.

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Reader question: Can I put my Swiss health insurance on hold if I’m abroad?

Given how expensive health insurance premiums are in Switzerland, you may be tempted to suspend your policy while you are abroad. Is this possible?

Reader question: Can I put my Swiss health insurance on hold if I'm abroad?

Unlike the obligatory car insurance, which you can suspend temporarily by depositing your registration plates at the local motor vehicles office, rules pertaining to health insurance are much stricter.

As the Federal Office of Public Health explains it, “If you leave the country for a certain period to travel or study but do not take up residence abroad, you are still required to have [health] insurance in Switzerland”.

In other words, as long as you are a registered resident of Switzerland, regardless of your nationality or passport, you must keep your compulsory Swiss health insurance and pay your premiums. While you do this, you also remain covered against most medical emergencies while you travel.

However, rules are less stringent for supplemental health plans which can, in some cases, be put on hold, depending on the insurance provider, according to Switzerland’s Moneyland consumer website.

The only exception allowed for suspending the health insurance coverage is during a military or civil protection service which lasts more than 60 consecutive days.

“During these periods, the risks of illness and accident are covered by military insurance. Your health insurance provider will refund your premiums”, according to FOPH.

Under what circumstances can you cancel your Swiss health insurance?

Swiss law says you can cancel your insurance if you are moving abroad, either permanently for for a period exceeding three months.

If you do so, only claims for treatments given while you still lived in Switzerland will be paid by your insurance; any medical bills for treatment incurred after you officially leave will be denied.

These are the procedures for cancelling your compulsory health insurance if you leave the country under conditions mentioned above

To announce your departure abroad, you must send your insurance carrier a letter including your name, customer number or AVS/AHV number.

You must also include a certificate from your place of residence in Switzerland confirming that you have de-registered from your current address, as well as the date of your departure.

Note, however, that if your new destination is another Swiss community / canton, rather than a foreign country, your insurance can only be cancelled from the following calendar year and only if you present proof of having taken up a new policy with another company.

READ MORE: EXPLAINED: How to register your address in Switzerland

You can find out more information about this process here

If you suspend your health insurance for less than six years, you can reactivate it at a later date with the same company when you return to Switzerland.

READ MORE : What you should know about your Swiss health insurance before you go abroad