Swiss expect slower economic growth as pandemic returns

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ZURICH, Nov 26 (Reuters) – The Swiss economy grew by a weaker-than-expected 1.7% during the third quarter, the government said on Friday, as it braces for a further downturn from the widening COVID-19 pandemic and ongoing supply chain shortages.

Growth between July and September, before the recent surge in coronavirus cases, decelerated from the 1.8% increase during the second quarter, and was below the 2.0% estimate in a Refinitiv forecast.

A worsening situation at home, increased restrictions abroad and the difficulty for companies to get parts and raw materials because of jammed supply chains, means economic development is likely to decelerate further during the fourth quarter.

The catch-up effect from previous months is also starting to fade, said Ronald Indergand, an economist at the State Secretariat for Economic Affairs (SECO), which released the figures on Friday.

“There are significant headwinds, particularly related to the pandemic development in other countries which have triggered new lockdowns and also if Switzerland would substantially tighten its own restrictions,” Indergand told Reuters.

Earlier this week, the government decided to hold off on new national restrictions, instead appealing to common sense and local measures to stem the rise in cases.

So far, the Swiss economy had recovered relatively well, with GDP now 1% higher in the third quarter than in fourth quarter of 2019, SECO said.

The government agency is due to give its latest forecasts for 2021, 2022 and 2023 on Dec. 9. Previously it has forecast economic growth of 3.2% for 2021 and 3.4% in 2022.

Big risks remain, particularly related to the pandemic, Indergand said. Supply chain problems are expected to weigh for a few more quarters.

“We think the recovery is going to continue in 2022, but it’s going to be bumpy,” said Indergand. “Up to this current moment, I don’t think we have to revise our forecast down massively, but the risk is clearly downward for 2022.”

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