The forecast uncertainty is unusually high, the Seco, on Wednesday. The extent of the economy let collapse since March, currently still difficult to assess. Also, the further course of the economy depends on the timing of the easing of the measures. Seco has now complemented its previous forecast on Wednesday with two negative scenarios.
In its forecast of mid-March, with a “relatively lenient development”, the Seco from a decline in GDP in the year 2020 in the amount of 1.5 percent, other economic researchers predicted last month, a decline in economic output between -1.0 and -4.0 percent.
more Severe recession than
The two negative scenarios of the Seco is now of a more severe recession than previously thought, at the time of the recovery, “longer could”. Would result in a decline in GDP of 7.1 or 10.4 percent. Similar expectations have already the Economists of the Italian Bank Unicredit, the forecast of the Switzerland, a decline in GDP of around 10 percent.
One of these scenarios comparable economic slump had taken place in Switzerland for the last Time in 1975: at that Time, the Swiss gross domestic product was slumped in the Wake of the oil crisis, to 6.7 percent.
recovery until 2021
In the Seco-scenario “V-recession” – a deeper decline in GDP, with a faster recovery would recover the Swiss economy following the decline of 7 percent at least 2021 with a massive GDP increase of +8 percent.
Even more serious for the country, the scenario is “L-a recession would be”, where it would be after a massive slump only to a weak recovery of the economy would shrink by 2020 in the order of 10 percent, and in 2021, only 3 percent.
GDP loss of up to 90 billion
Economists, the level of GDP, and failure to quantify by means of the corona of a crisis. The GDP loss would be in the “cheap” base scenario by the end of 2021 to the end of 2019, around 30 billion Swiss francs. In the scenario “V-recession” increases the GDP loss of around 90 billion Swiss francs and a “L-recession” would mean a GDP loss of 170 billion.
Delayed the economic recovery might not last through a prolonged “Shutdown” of the authorities. In the “V scenario” of the Seco this would be repealed by the end of may in full, in the even more negative “L-scenario” there would be a gradual easing from June.
risk of second infection wave
Also, other Economists stress the uncertainty in the easing measures: Further, there is also a risk of a second infection wave after wave of a repeal of the measures, or even an adaptation of the Virus to the human immune system, write the Economists at the Bank Unicredit in its analysis.
Important for the economic cycle and the strength of the recovery will be the extent of the “second-round effects”. Thus, increasing number of company insolvencies are meant to be as a result of the measures or waves of redundancies at the company.
unemployment up to 7 percent
So, the unemployment rate in Switzerland could rise in this country, considerably stronger than the Seco previously expected (2.8 per cent): on average for The year would climb in accordance with the scenarios to 4 per cent or even 7 per cent. This would not slow down the least of the consumption of households considerably.
Even in the darkest Seco-negative scenario is still not a crisis of the banks and financial system. Not only a strong increase in loan losses could put the Bank sector In Switzerland and abroad in distress. Also, other risks threaten about the real estate market.
the consequences for Switzerland had also crises abroad: the Corona-pandemic represents in the Euro area, especially for countries such as Italy and Spain, a threat that have just recovered from the sovereign debt crisis, the Zurich-based KOF and the German ifo Institute, in its “Euro-zone Outlook” notice. A back of the European debt crisis flare-up of a “non-negligible risk” to a forecast. (SDA)