Coronavirus: Switzerland sees economic resurgence despite fears of second wave

Coronavirus: Switzerland sees economic resurgence despite fears of second wave
Swiss President Simonetta Sommaruga (L) and Swiss Health Minister Alain Berset walk in front of the Swiss House of Parliament. Photo: FABRICE COFFRINI / AFP
Switzerland's economy appears to be bouncing back from its coronavirus-induced funk but a surge in fresh infections could dramatically slow any recovery.

The Swiss Economic Institute (KOF)'s monthly economic barometer rose in September for the fourth consecutive time, jumping 3.6 points to 113.8 points — a 10-year-high, it said in a statement.

The key economic indicator, which had plummeted to unprecedented lows in April and May, has now surged to a level last seen in 2009-10, at the end of the global financial crisis.

“At present, the economy is taking a V-shaped course, so that a recovery of the Swiss economy can be expected for the time being,” KOF said.

The news came after Switzerland last month plunged into a recession after the economic affairs ministry (SECO) said the coronavirus pandemic had caused a “historic” slump in economic activity in the country.

But the central bank last week voiced slightly less pessimism for the full year outlook, now expecting GDP to shrink 5.0 percent in 2020, compared to its previous forecast of 6.0 percent.

KOF meanwhile said the wealthy Alpine nation had seen a clear recent upswing in its hotel and restaurant sectors, which had been devastated by the lockdowns and other measures implemented earlier this year to  rein in the virus.

It also highlighted positive trends in foreign demand, especially in terms of company orders, and said the manufacturing sector and private consumption were also picking up again.

Analysts with Capital Economics hailed the KOF findings, saying they suggested “the Swiss economy gathered momentum going into” the fourth quarter.

Second wave fears

KOF warned however that its rosy outlook could shift if Switzerland, like much of Europe, experiences a big surge in fresh coronavirus cases.

“A second wave of Covid-19 cases could lead to a sharp revision of this assessment,” it said.

To date, Switzerland has seen nearly 1,800 deaths and more than 53,000 cases of the novel coronavirus.

Swiss daily case numbers regularly topped the 1,000 mark in March but stringent measures pushed new daily infections into the low double-digits in June.

Since then however, infections have been steadily rising, with the country currently registering fresh daily case numbers in the hundreds, amid signs of a second wave of the epidemic in much of Europe.

The Capital Economics note remained upbeat however.

“While the second waves of virus cases in parts of Europe are a downside risk for Swiss exporters, the rebound in German manufacturing, and signs that the pick-up in virus cases in Switzerland has already peaked, bode well for the near term,” it said.

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