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Aug 31, 2020 at 7:00 AMSwitzerland’s GDP fell by -8.2% in the second quarter of 2020, after a revised -2.5% in the previous quarter.* Domestic economic activity was severely restricted due to the pandemic and containment measures. At the same time, the global economy plunged into a sharp recession. However, in international comparison, the GDP decline in Switzerland was relatively limited.
(Bern) In the second quarter, Switzerland’s GDP experienced the largest decline since the start of quarterly records in 1980. Compared to the situation before the Corona crisis in the fourth quarter of 2019, GDP fell by a cumulative -10.5% in the first half of 2020. The sectoral structure of the domestic economy contributed to a relatively mild decline in international comparison.
The significant pharmaceutical sector increased its sales, preventing an even sharper decline in the total manufacturing sector (-9.0%). Meanwhile, the cyclical industrial sectors, such as machinery and metals, as well as precision instruments and watches, suffered severe setbacks due to the international economic crisis. Goods exports** (-9.4%) also fell sharply.
Service Sector Most Affected
The service sector was most affected by health policy measures to contain the pandemic in the second quarter; value added collapsed broadly. However, even in this sector, the Swiss sectoral structure proved stabilizing in international comparison. Thus, value added in the hospitality industry (-54.2%) and in the transport and communication sector (-21.7%) fell extraordinarily sharply. The GDP share of tourism-oriented services is lower in Switzerland than in most neighboring countries. The trade sector (-3.6%) also reported a comparatively mild decline in value added. On the one hand, transit trade was able to grow significantly. On the other hand, retail developed relatively solidly, even considering the closed hospitality businesses and travel restrictions. Finally, the health sector (-8.6%) and business-related services (-8.6%) also recorded a significant decline.
Consequently, service exports (-15.9%) also fell sharply.
Health policy containment measures limited private consumption expenditures (-8.6%). Due to closed businesses and venues, as well as other restrictions, particularly in healthcare and travel, expenditures in most consumption areas fell extraordinarily sharply. Alternative sales channels such as online trade could only partially compensate for the losses. Construction investments (-4.0%) and equipment investments (-11.7%) also saw significant declines. Government consumption grew only slightly (+0.2%). In total, domestic final demand (-7.4%) recorded a historic decline. Accordingly, imports of goods*** (-14.3%) and services (-22.2%) also collapsed.
Notes
In line with international practices, a fundamental revision (“benchmark” revision) of the national accounts will take place in 2020.**** To make it available as quickly as possible, revised GDP data from the first quarter of 1980 to the second quarter of 2020 will be published on September 28, 2020.
The Corona pandemic also affects statistical production. As recommended by the European statistical office Eurostat, the base data and methods in the current GDP calculation have been thoroughly reviewed to avoid distorting effects due to the Corona pandemic.***** In particular, in addition to existing data sources, current information on applications for short-time work and the settlements received so far have been taken into account. Furthermore, the results were cross-checked with the containment measures according to the Covid-19 Regulation 2 of the Federal Council. Finally, all seasonal adjustment models were reviewed and adjusted where necessary. Nevertheless, it is possible that stronger revisions than usual will be necessary in the coming quarters due to the current data situation.
* Real change rates compared to the previous quarter. Data and further information: www.seco.admin.ch/bip
** Excluding valuables.
*** Excluding valuables.
***** https://ec.europa.eu/eurostat/data/metadata/covid-19-support-for-statisticians
