Swiss economy: Growth continues

Swiss economy on road to recovery

The Swiss economy is recovering rapidly as the pandemic subsides. What rate of economic growth can companies expect this year, and why is Switzerland's economic upturn likely to lose traction in 2022?

Swiss economy suffered less during pandemic's second wave

The economic hit caused by the second wave of the pandemic was not as severe as that seen during the first wave. According to the State Secretariat for Economic Affairs (SECO), economic output showed only a slight year-on-year fall in the first quarter of 2021 at minus 0.5%. This was down to several factors:

  • The Swiss economy benefited directly or indirectly from an early recovery in demand from Asia; in addition, borders remained open as far as trade was concerned.
  • People's mobility fell less sharply than in the spring of 2020, and the effect on economic output was therefore less significant than during the first wave.
  • Lockdown measures were less dramatic, and childcare was available throughout this period.

Dynamic economic growth likely in second half of 2021

The recovery has begun automatically as more parts of the Swiss economy have reopened. A large proportion of households amassed lockdown savings during the second wave too – and much of this surplus is currently being spent. Private consumption is therefore likely to return to normal by the early autumn, with the exception of areas such as the events industry and parts of the hospitality trade.

The manufacturing sector likewise continues to enjoy a recovery boom, as shown by the fact that the Purchasing Managers' Index (PMI) for manufacturing currently stands at its highest level since the survey began in 1995. In overall terms, the experts anticipate growth in gross domestic product (GDP) of 3.5% in 2021. This should more than offset the 2.6% slump seen in 2020.

Switzerland's economy: Swiss economic activity is recovering

Swiss economy recovers as reopening continues

Turnover index, weekly averages. October 1, 2020 = 100
Source: Monitoring Consumption Switzerland, Credit Suisse

The recovery in Swiss economic activity is likely to fade in 2022

Growth momentum is likely to slow to 2% in 2022 as catch-up effects wear off. In addition, the Credit Suisse experts assume that roughly 30% of the savings put away during the two lockdowns are likely to become "rainy-day" savings.

Some companies are already showing a degree of skepticism about the duration of the recovery boom, with manufacturers appearing reluctant to recruit new staff despite signs of capacity being stretched.

Swiss economy: Employment continues to lag behind the PMI

Employment continues to lag behind the PMI

Growth threshold = 50
Source: procure, Credit Suisse

Unemployment has been falling since January 2021

Unemployment has been falling across all sectors since January 2021, when it reached its highest point since the 2009 financial crisis. Meanwhile, the fact that the number of in-work job seekers has not declined all that much is striking. These are people who are looking for work but cannot start immediately.

In addition, the number of jobseekers in temporary positions has been rising every month since the start of the year. This encompasses all activities carried out by recipients of unemployment benefits to improve their financial situation, even though the salary amount is below their daily benefit. The people helping out at COVID-19 vaccination centers is one example of this kind of work.

Swiss economy: Many employees in temporary positions while seeking work

Number of jobseekers in temporary positions is growing steadily

Number of registered unemployed persons and job seekers; last data point: May 2021
Source: procure, Credit Suisse

Would you like to learn more about what Switzerland's current economic situation means for your company?

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