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Swiss economy shrinks as Covid curbs spending

Switzerland's economy shrank in the first quarter as consumption and the service sector were badly hit by a second partial virus lockdown, the economy ministry said Tuesday.

Swiss economy shrinks as Covid curbs spending
Swiss Foreign Minister Ignazio Cassis, Swiss President Guy Parmelin and Swiss Justice Minister Karin Keller-Sutter arrive for a press conference. Photo: Fabrice COFFRINI / AFP

The country’s gross domestic product fell by 0.5 percent in the first three months of the year after posting modest growth in the previous quarter, according to the ministry.

Switzerland’s government tightened restrictions in late December and mid-January in an effort to contain a rise in coronavirus infections, though the lockdown was less strict than earlier in 2020.

Authorities began to ease the restrictions in early March, letting shops, museums and zoos reopen, while restaurants and cafes were allowed to have outdoor seating in late April.

Food services and the hotel industry nosedived in the first quarter while consumption also fell sharply, according to the state secretariat for economic affairs.

But industry grew sharply, preventing a steeper decline in GDP, it said. “There was no repeat of the economic slump experienced in spring 2020,” the secretariat said in a statement.

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ZURICH

Jobs: Why Zurich has rebounded better than other Swiss cities from Covid

The Covid pandemic hit Switzerland hard, although the country's largest city has rebounded strongly.

Jobs: Why Zurich has rebounded better than other Swiss cities from Covid

Measures imposed due to the Covid pandemic, which began in earnest in February 2020, shuttered businesses across the country and pushed many people out of work. 

When most notable Covid rules were relaxed in Switzerland in mid-February 2022, the economic recovery – highlighted by a strong job market – began in earnest in 2021. 

READ MORE: How the Swiss job market rebounded from the Covid pandemic

Nowhere was this more evident than Zurich, Switzerland’s largest and most economically powerful city. 

How did Zurich rebound from the Covid pandemic in comparison to the rest of the country?

Even though Zurich, along with other large Swiss cities like Geneva, Basel, Bern and Lausanne, have been hit hard by the pandemic from the employment perspective, Zurich’s labour market is now growing faster than in other urban centres.

One of the reasons for this upward trend is that young, well-educated foreigners are coming back.

In the first nine months of 2021, the city’s population grew significantly.

In September alone, it recorded 2,200 additional residents.

This is mainly due to people with a B residence permit, according to Klemens Rosin, methodologist at Zurich’s Statistics Office.

During the crisis, far fewer of them left the city. “This group is made up of well-educated, younger and mobile foreigners who have made a significant contribution to Zurich’s growth”, Rosin said.

Zurich’s employment market is expect to grow even further.

READ MORE: How hard is finding work in Zurich without speaking German?

That’s because in the coming years, many Zurich workers will retire — an estimated  210,000 by year 2050 — creating more job opportunities for younger employees.

In fact, according to a study commissioned by the canton in 2021, if Zurich’s economy is to continue to flourish, it will need around 1.37 million workers by mid-century.

If these vacancies will not be filled, then income, tax revenue and the financing of social security programs will be impacted.

READ MORE: Have your say: What’s the best way to find a job in Zurich

While it is difficult to predict what jobs will be most in demand in 2050 — what new technologies will emerge in the meantime — right now and in medium term, IT workers will be especially needed, experts say, because businesses will continue to to digitalise and automate.

Lower skilled jobs will also be in higher demand, including hospitality, retail and transport. 

With hundreds of thousands of vacancies to fill, people with the permission to work in Switzerland are likely to be flush with offers – particularly skilled workers with recognised qualifications. 

READ MORE: Why finding a job in Switzerland is set to become easier 

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