KOF Bulletin

The results of the semi-annual KOF Investment Survey point to a nominal increase in investment of 8.2 per cent in 2024, driven by technological progress and supported by the service sector. By contrast, industry and construction are reporting a slowdown or even a decline in their investment plans owing to funding shortages and a downturn in demand.

The latest KOF research shows that AI technology is being introduced in relatively closed groups, similar to exclusive clubs. This could lead to a concentration of relevant AI know-how, making it more difficult for this key technology to spread and increasing dependence on a small number of technology providers. This in turn can make the economic performance of different regions less equal. Policymakers should push to overcome excessive cluster effects.

A recent study by KOF analyses the impact that central bank communication has on financial markets, which are a key transmission channel for monetary policy. The findings show that monetary policy speeches are an important source of information for the formation of expectations in financial markets. The findings also suggest that volatility in financial markets increases when a central bank communicates too complexly.

The KOF Business Situation Indicator for the Swiss private sector rose slightly in February (see chart G11), following two consecutive months of modest declines. Overall, business activity at Swiss companies has not changed significantly since October 2023. The sharp downward trend of the first three quarters of 2023 has been broken for the time being. Although the Swiss economy has recovered, there is a lack of momentum.

Switzerland’s seasonal worker statute, which was abolished in 2002, tied residence permits to employers. According to the monopsony theory, such regulation gives employers greater bargaining power in wage-setting and could depress wages. This article analyses this hypothesis and suggests that immigrants’ social and economic rights – strengthened by the free movement of people – may have helped to reduce wage differentials.

Women are still under-represented in managerial positions in the academic sector. A programme for female professors in Germany aims to change this. An ongoing study involving KOF is investigating the success of this support programme.

Has the free movement of people had a negative impact on Swiss firms’ willingness to train apprentices? A new study shows that the number of apprenticeships did not fall during the first few years following the opening of the country’s border. However, the reasons why firms train apprentices has changed because it has become easier and cheaper for them to recruit suitable workers externally.

The KOF Business Situation Indicator hardly changed in December (see chart G13). Its rapid decline, which lasted from the beginning of 2023 into October, has slowed for the time being. The Swiss economy is currently sluggish.

As in many other countries, wealth concentration in Switzerland has increased in recent decades and remains high. At the same time, taxes have regularly been reduced over the last 50 years. Wealth tax cuts explain around a quarter of the observed growth in wealth concentration. This means that there are other key drivers of wealth inequality besides taxes.

How did the Swiss fare during the first two waves of the COVID-19 pandemic? Using data from Dargebotene Hand and Swisscom, analysis conducted by Marc Anderes and Stefan Pichler shows that calls to the Dargebotene Hand helpline increased significantly just after the outbreak of the pandemic.

Restrictive monetary policy, falling but still high inflation and multiple uncertainties will continue to slow the global economy this year. According to the KOF Economic Forecast, worldwide business activity will not pick up again until 2025.

Alexis Perakis, monetary policy expert at KOF, talks in this interview about his predictions for inflation, interest rates and the Swiss franc exchange rate this year. He considers the current debate about interest-rate cuts to be premature.

There are many concerns about how artificial intelligence (AI) might impact communication and democratic processes adversely, as opportunities to the production of fake news are becoming more and more sophisticated. Yet AI also offers new ways to organise democracy. It could even enable direct democracy to be reinvented. Hans Gersbach (KOF) and César Martinelli (George Mason University) have been exploring these possibilities and they present one of its core ideas in this article.

Johannes Dahlke, Assistant Professor of Digital Innovation and Entrepreneurship at the University of Twente, KOF Research Fellow and former member of the Innovation Economics Section, talks in this interview about the potential of artificial intelligence and explains how technological change will affect the labour market and individual professions.

The KOF Business Situation Indicator for the Swiss private sector continued to deteriorate in November (see graphic G 3). This was the third monthly decline in a row. The business outlook for the next six months remains virtually unchanged at a subdued level. Economic activity in Switzerland remains sluggish.

The development of new digital technologies is increasingly dependent on international knowledge. In the recent past this trend has led to political concerns about dependence on foreign knowledge suppliers. A study by KOF, which uses a global patent dataset from 1980 to 2015, emphasises the importance of international knowledge networks for technological progress.

The KOF Business Situation Indicator for the Swiss private sector, which is calculated from KOF’s Business Tendency Surveys, fell in October for the second month in a row (see chart G5). Following a modest decline in the previous month, business activity cooled significantly in October. By contrast, companies’ business expectations for the coming six months are almost unchanged and more or less average on a medium-term comparison.  

Switzerland’s population is ageing. This article attempts to qualitatively assess the impact that this trend has on inflation. Its immediate effects are likely to be moderate. At the same time, there are risks: inflation could turn out to be higher but, surprisingly, it could also be lower.

In today’s ever-changing global economy, clear and effective communication by central banks is crucial to build trust in their policies and manage public expectations. A new study by researchers at KOF and ETH uses an experiment to investigate how central banks influence inflation expectations through different media formats and which communication formats are most effective.

Central banks shape global financial markets through their carefully crafted speeches. Words often trigger immediate market reactions and provide a more timely signal than many regularly updated economic indicators. When compiling its analysis, KOF uses natural language processing to decode indicators from central bank transcripts that make it possible to replicate and predict market movements in a timely manner.

The KOF Business Situation Indicator for the Swiss private sector retreated very slightly in September after flatlining in the previous month (see chart G 8). Its decline was modest, however, and in return companies are slightly more confident about their future business than they were before. The Swiss economy is not showing any fundamental signs of change at the moment.  

Swiss foreign trade is holding up well despite global turbulence and the current weakness of major trading partners such as China and Germany.

The international economy has slowed. Above all, the effects of China’s weakness and of restrictive monetary policy are weighing on the global economy.  

KOF economists Vera Eichenauer and Heiner Mikosch talk in an interview about the Chinese economy’s weaknesses and their impact on the Swiss economy.

The KOF Business Situation Indicator for the Swiss private sector pauses in August (see Chart G 5). After a sharp decline in the previous month, it does not fall further. Expectations for further business development remain rather subdued. The Swiss economy is developing sluggishly.

In many countries, support for xenophobic views varies considerably from region to region. It is often strongest in areas without a large proportion of foreigners. A new study shows that a lack of local experience with immigration is partly responsible for this. Regions that have had more experience with immigration and integration in the past exhibit a much weaker nationalist backlash against new waves of immigration.

Restricting employment opportunities for refugees reduces their likelihood of working and earning in the long term. This imposes high costs on refugees and host societies.

KOF economist Andreas Beerli explains in an interview why immigration is desirable from an economic point of view and in which areas Switzerland still needs to improve.

An estimated 33,000 people die in the European Union every year as a result of being infected with antibiotic-resistant germs. The number of deaths associated with antimicrobial resistance worldwide is estimated to be more than 5 million per year. New antibiotics urgently need to be developed, but this is often not profitable for companies. This article discusses a dynamic funding model that would make it more attractive for firms to develop new antibiotics.

A significant increase in company bankruptcies has been evident in Switzerland since autumn 2022, while business start-ups have been declining sharply for several months. The following article examines this trend in detail and gives possible reasons for this increase.

Although many Swiss firms see their business activities as being exposed to physical climate risks, they nevertheless view ecological change predominantly as an opportunity rather than a risk. Investment aimed at combatting climate change is accelerating and, in comparison with the EU, Switzerland is one of its pioneers. Having added a new block of questions to its investment survey, KOF can shed light on the economic impact of climate change from the perspective of Swiss companies.  

Although the much-feared energy crisis has failed to materialise, persistently high inflation, rising interest rates and geopolitical conflicts are weighing on the global economy.

The KOF Business Situation Indicator for the Swiss private sector rose slightly in June, averting a third consecutive decline (see chart G 16). However, this modest improvement does not yet indicate that the Swiss economy has received a significant boost. Business expectations about developments in the near future emphasised this view; they hardly changed compared with the previous month and were average overall.

The KOF Business Situation Indicator fell across the board in May. This means that the business situation is worsening for the second month in a row, and it is significantly less encouraging than it was in May last year (see chart G 10). Economic activity in Switzerland is currently sluggish.

One-fifth of Swiss industrial companies are moderately to heavily reliant on critical inputs from China. Their greatest dependence is in the electronics sector, followed by the pharmaceuticals and chemicals sectors. Just under one-fifth of firms are unable to assess their own reliance. The measures already taken or those that are planned reveal that production and procurement are being redirected towards Europe and Switzerland. These are among the findings of a KOF company survey.

Michael Graff, head of the Macroeconomic Forecasting research division at KOF, explains the advantages and disadvantages of the Swiss pension system and why pension reforms are so difficult to implement.

This article is a collaboration between man and machine. We conducted an interview with the ChatGPT voice software on economics, business cycle research and politics. KOF innovation researcher Mathias Beck and KOF co-director Hans Gersbach rank the quality of ChatGPT’s responses and its potential below.

The KOF Business Situation Indicator for the Swiss private sector, which is calculated from the KOF Business Tendency Surveys, fell in April after barely moving in the previous month (see G 3). Business is thus still performing better than it did in the autumn of last year but is no longer as buoyant as it was in January.

What factors influence wage levels in the various sectors? This analysis shows that, in particular, the extent of the shortage of skilled workers in an industry is positively correlated with the wage growth expected by companies.

At first glance, ‘bail-in bonds’ are an attractive way of recapitalising banks in distress. In the case of Credit Suisse, however, according to FINMA, loss buffers amounting to over CHF 50 billion were not activated for recapitalisation purposes because no compulsory restructuring was ordered. Bail-in bonds, which can only be written off or converted into equity through state intervention, present a number of pitfalls, which are discussed in this article.

There is currently much discussion about developments in the local real-estate and rental housing markets. This article adds to the debate by classifying the Swiss construction sector during the current period of upheaval.

2022 will go down in history as an exceptional year for labour markets in Switzerland and many other European countries. KOF is forecasting that employment will increase by 1.5 per cent this year and 1 per cent next year.

The energy crisis has turned out to be less severe than feared – partly thanks to the mild winter. However, high inflation, rising interest rates and geopolitical risks continue to weigh on the global economy. This situation is compounded by the risk of disruption in the banking sector.

The KOF Business Situation Indicator for the Swiss private sector remained almost unchanged in March (see chart G 13). It was primarily the manufacturing sector that presented an obstacle to any improvement. The economy therefore failed to gain any real momentum.

KOF Director Jan-Egbert Sturm explains why the rescue of Credit Suisse was the right thing to do and assesses the macroeconomic consequences of its takeover by UBS.

In Switzerland – in contrast to Germany – low wages have managed to keep up surprisingly well with average wages. Research to date cannot conclusively explain the different trends in these two countries. In this article, KOF economist Kristina Schüpbach discusses various theories on this topic. One possible explanation is that Switzerland’s job market is more extensively covered by collective labour agreements than Germany’s.

Michael Graff, Head of the Research Division "Macroeconomic Forecasting", explains why inequality should be a key topic in economics and why redistribution and efficiency do not necessarily have to be opposites.

The business climate for the Swiss private sector deteriorated somewhat in February. Having risen sharply in January, the Business Situation Indicator could not quite sustain the previous month’s value in February (see chart G 3). Nevertheless, the economic situation in Switzerland in the first few months of this year is significantly more encouraging than it was in the autumn of 2022.

Although Swiss companies intend to curb their pace of investment in 2023, this slowdown does not point to a recession. According to the results of the semi-annual KOF Investment Survey, investment growth is likely to slow from a nominal 5.3 per cent last year to 3.9 per cent in the current year. Financial bottlenecks in particular are having a dampening effect on investment expectations.

The KOF Business Situation Indicator for the Swiss private sector, which is calculated from the KOF Business Tendency Surveys, rose significantly in January (see chart G11). While firms’ business had deteriorated in the autumn, a clearly positive trend was visible in January. The operating outlook for the coming months is more encouraging than it was before.

The proportion of firms that use various IT security technologies and have appropriate strategies and individuals responsible for cyber security has risen sharply over time. This trend is accompanied by a decrease in the percentage of firms that have security issues. The growing protection of digital infrastructure may therefore pay off in the form of fewer cyber attacks.

What would a sharp rise in the price of oil mean for Swiss companies? What are the specific ways in which such a shock would be transmitted to their economic activities? And which sectors would be particularly affected? A KOF survey shows that uncertainty and higher costs are the factors that weigh the heaviest because, according to the managers surveyed, they cause sales losses and price increases.

The research landscape in Switzerland is becoming more diverse again. Smaller firms and companies offering modern services in particular are increasingly conducting research and development (R&D). This innovative business climate is making the Swiss economy more resilient to crises such as COVID-19.

The KOF Business Situation Indicator rose slightly in December, having previously fallen twice in a row (see chart G 15). The recent recovery trend continued, with business activity improving in all sectors surveyed in December. Although the Swiss economy is operating in a challenging environment, it is not in crisis.

New survey data provide insights into the price-setting behaviour of Swiss companies. They shed light on price setters’ motives when they are reviewing, forming and adjusting their prices, as well as the reasons why they do not adjust their prices. In particular, they illustrate how prices are set so as to take account of the competing interests between customers and competitors.

In Europe, persistently high inflation and high energy costs are likely to continue to weigh on demand. In the United States, inflation is leading to a loss of purchasing power, while rising interest rates are dampening investment. The outlook for the Chinese economy has also darkened.

KOF expects interest rates to continue to rise this year in the euro area, the United States and Switzerland. It predicts that inflation will eventually fall but will remain high. The two economists Alexander Rathke and Pascal Seiler explain why in an interview.

The KOF Business Situation Indicator fell in November for the second month in a row (see Chart G 9). Although its decline is slowing, it affected all of the sectors surveyed in November. The Swiss economy is slowing down slightly.

Almost all of Switzerland’s major trading partners are currently grappling with the economic consequences of the Russia-Ukraine war and with self-inflicted problems. In this interview, Heiner Mikosch and Philipp Kronenberg from KOF’s International Forecasts Section analyse the current situation of the global economy

In a study conducted for Switzerland’s State Secretariat for Economic Affairs (SECO), KOF has examined the use of the Job-Room.ch online job platform within the context of the introduction of mandatory job notification. It shows that people without IT skills, with little knowledge of the local language or with low levels of education are at a disadvantage.

KOF Director Jan-Egbert Sturm talks in an interview about the future of international trade, the lessons to be learned from the coronavirus crisis, and Switzerland’s competitiveness.

Swiss companies’ business situation in November remained virtually stable compared with the previous month (see chart G 10). The Business Situation Indicator is thus sustaining its high level. Companies remain confident about developments going forward. The economic recovery is currently robust.

A recent study by the KOF Swiss Economic Institute and the Bern University of Applied Sciences on the circular economy shows that Switzerland is only at the beginning of a transformation process. Basically, the study estimates Switzerland's potential to efficiently implement circular measures and thus generate competitive advantages as high.

Government support measures have meant that far fewer companies have had to file for bankruptcy since the start of the coronavirus crisis than in normal times. Recently, however, corporate bankruptcies have risen sharply, returning to pre-crisis levels. This trend is broadly based both sectorally and regionally.  

Economic inequality across much of the world has increased in recent decades, which is linked to social and economic trends. However, any study of the causes and effects of this phenomenon is hampered by the limited availability of consistent inequality data. A KOF study constructs a measure of inequality based on satellite data. The basic idea is that light intensity reflects economic activity in a geographical unit.

Prices have risen recently in both the United States and Europe. But much of this price increase can be explained by the COVID-19 pandemic and is therefore likely to be only temporary.

In this interview, KOF economist Heiner Mikosch explains the data and algorithms behind the new KOF Nowcasting Lab and how it differs from a classic economic forecast.

Swiss companies’ business situation continued to improve in October and is now almost as encouraging as it was in spring 2018 (see Chart G 7). The worst of the COVID-19 crisis has been overcome. Companies’ expectations about future developments remain optimistic and uncertainty continues to decrease.

Recently there have been increasing warnings of a resurgence of inflation. This paper presents the results of an empirical study of the main factors that have affected inflation over the past two decades.

With the financial crisis and the COVID-19 crisis the world has experienced two severe economic crises within just over a decade. An analysis of the causes, evolution and consequences of these two economic crashes shows that the two crises could hardly be more different.

The KOF Business Situation Indicator rose in September after barely moving in the previous month (see chart G 16). Swiss companies’ business is currently predominantly encouraging; the last time it was better than at present was back in 2018. Firms are looking ahead confidently to growing their business over the coming six months. The Swiss economy is still on an upward trajectory.

In August, KOF and Switzerland’s Neue Zürcher Zeitung (NZZ) newspaper surveyed economists at Swiss universities on the subject of income and wealth inequalities and the associated ‘99 per cent Initiative’. 70 per cent of the 142 survey respondents were of the view that inequality of disposable incomes in Switzerland has increased as a result of the coronavirus crisis. More than half of them fear that income inequality will become worse in the long term.

In this paper we show that the development of wealth as a percentage of income in Switzerland has followed a J-shaped pattern over the last 120 years: a very stable trend in the 20th century followed by a sharp increase since 2010.

Gainful and inactive work is still unequally distributed between the sexes. One reason is that few men work part-time. This is partly due to the fact that men looking for part-time jobs are discriminated against by recruiters.

In the fight against the pandemic, countries are relying on non-pharmaceutical containment measures. In Switzerland, these have led to a decline in new infections. In addition, the population is helping by making voluntary adjustments to their behaviour.

The impact of uncertainty on the economy was most recently illustrated in the context of the pandemic. But the uncertainty was also a decisive factor in previous crises. A new KOF study examines the impact of uncertainty on economic development.

Swiss companies’ business remained fairly stable in August. July’s sharp rise in the KOF Business Situation Indicator was almost, but not quite, maintained. The business situation therefore remains favourable.

China’s growing economic and political influence around the world and the impact that this has on Switzerland were the topics of the KOF Economic Forum held on 11 June this year. In Switzerland's China strategy, China is primarily portrayed as a partner whereas, in the EU and the US, China is mainly perceived as a competitor or rival. How does China respond to the West’s approach? And what does this mean for the Swiss economy?

The coronavirus crisis caused investment activity in the first year of the pandemic to fall less sharply than firms had originally feared. This is shown by the results of the semi-annual investment survey conducted in spring 2021. Investment is now expected to grow by a nominal 7 per cent in the current year. The increased proportion of companies that plan to pursue expansion investment is a sign of positive demand stimulus, especially in industry and among service providers.

Now that the pandemic is largely under control in most advanced economies, economic momentum is also picking up again worldwide. The United States in particular is living up to its reputation as the locomotive of the global economy thanks to massive government stimulus. However, there is a growing danger that the US economy will overheat in the medium term.

Over the past 140 years, female Swiss life expectancy has increased from 58.4 years in 1876 to 85.6 years in 2016. Male life expectancy has increased from 56.3 years in 1876 to 81.9 years in 2016. Most of these gains are due to a larger share of the Swiss population reaching old age, while a small remainder of the gains is due to an increase in old age itself.

The strength of Swiss companies’ business activity in June was similar to the previous month (see G 15). Following five recent rises in the KOF Business Situation Indicator, some of which were quite significant, the recovery was therefore weaker in June. The economy's recent turbulent catch-up process is slowing down.

Swiss companies’ business continued to improve in May. The Business Situation Indicator has thus been rising steadily since the beginning of the year (see G 6). Although the indicator has not yet returned to its pre-crisis level, this landmark is within sight. The Swiss economy is increasingly picking up speed. One growing problem, however, is the availability of intermediate products.

A webinar entitled ‘KOF Beyond the Borders’ saw representatives from academia and the media discuss Brexit and the question of what lessons can be learned from the UK’s experience that could be applied to Switzerland.

Two major sporting events are on the agenda this year: the European Football Championships and the Olympic Games in Tokyo. The sporting organisations behind them, UEFA and the IOC, both have their headquarters in Switzerland. Consequently, these competitions also have an indirect economic impact on Switzerland's gross domestic product.

Reality for much of the year so far during the coronavirus crisis has consisted of lockdowns, working from home and living a dreary everyday existence while stock markets have kept hitting new highs. However, there are academic explanations for this apparent contradiction.

KOF Director Jan-Egbert Sturm explains in an interview why, from an economic perspective, the conclusion of a framework agreement between Switzerland and the EU would have been desirable and what economic risks now loom after the failure of the agreement.

US President Joe Biden has started his term in office with plenty of momentum. But the 78-year-old is facing major challenges in what is the most severe economic crisis in post-war history – and his political and fiscal leeway is limited. The following is an interim assessment of the first 100 days of the Biden administration.

In April of this year, KOF and Switzerland’s Neue Zürcher Zeitung (NZZ) newspaper surveyed economists on the subjects of state aid during the coronavirus crisis and the future of public finances. There are hardly any economists who think that the debt brake should be applied very rigorously. There is also agreement among the 167 survey respondents that cuts in education, research and social security should be avoided. The level of government support is generally not considered to be too high.

At the beginning of 2015 the Swiss National Bank abandoned the franc-euro minimum exchange rate, triggering a deflationary shock. How did incomes and unemployment of workers with and without rigid wages react to this?

The Swiss economy reported a significantly better business situation in April than in the previous month (see G 14). The upward trend in the Business Situation Indicator, which has been ongoing since the beginning of the year, is thus continuing at an accelerated pace. Firms are also much more confident about developments over the coming months than they were in the previous month and at the beginning of this year.

While the decline in demand is constraining fewer and fewer companies, the availability of goods, inputs and supplies is now one of the most important restrictions. Among wholesalers, for example, about half of all businesses are affected.

The business situation of Swiss companies continued to ease in March. After hitting a low in January, the Business Situation Indicator rose this month for the second time in a row (see G 18). This improvement is visible across all sectors surveyed. The recovery of the Swiss economy is strengthening.

While the economies of China and the United States have already rebounded significantly from the coronavirus pandemic, the recovery in Europe has been sluggish. From the second quarter onwards, however, KOF expects this recovery to progress in Europe as well thanks to the vaccination campaigns and a slight easing of restrictions.

Far fewer companies went bankrupt last year than would have been expected in normal times. This is due to the legal and economic support measures introduced. A sudden wave of bankruptcies is still not expected.

The seven major Swiss regions differ significantly in some cases with regard to production factors but not in terms of the results of the innovation process. The differences in input factors appear to be primarily due to structural factors. It is small firms in the construction and service sectors that cause these differences. At the same time, these types of firms make a smaller contribution to the results of the innovation process, which reduces the regional differences in innovation success.

On paper, employment in Switzerland has hardly fallen despite the coronavirus crisis. But a brief look behind the scenes shows that the pandemic and its economic impact have also affected the labour market. Many companies will remain reluctant to create new jobs on a large scale until the current uncertainty has subsided.

The business situation of Swiss firms recovered slightly in February after being under pressure at the beginning of the year. Nevertheless, the situation is currently less encouraging than it was in the autumn. The Swiss economy is still waiting for further tailwinds.

Most traditional macroeconomic indicators were not suitable for capturing the drastic economic slump of spring 2020 in a precise and timely manner. This brought into focus the need for high-frequency economic monitoring using alternative data such as credit card transactions. These alternative data sources offer valuable insights but are also fraught with problems.

Although more and more firms are recognising the benefits of digitalisation and are therefore investing in the corresponding technologies, this approach does not necessarily yield productivity gains. A new study by KOF shows how companies can improve their competitiveness by modifying their organisational structures and investing in information technology (IT).

Investment activity by Swiss companies slumped in 2020 as a result of the economic crisis caused by the coronavirus pandemic. The findings of the semi-annual KOF Investment Survey show that companies plan to catch up on some of their postponed investment projects in the second year of the pandemic. However, one in five firms lacks the financial resources to do so, which is slowing down their investment drives.

The coronavirus crisis has exacerbated existing inequalities in Switzerland. Low-income households are being hit particularly hard by the pandemic – not just financially but also in terms of mental health. This is because most high-income earners have been able to switch to working from home and have suffered only a minor loss of income, whereas many low-income earners have been affected by short-time working and unemployment. And that, in turn, has had a serious impact on their mood.

About 60 per cent of the businesses surveyed in January claimed that the pandemic had reduced their revenue last year. The hospitality industry has been hit particularly hard: annual revenues here are likely to have fallen by about 37 per cent in 2020, with almost one in three businesses seeing a drop of more than 50 per cent. Fear of bankruptcy increased again in all sectors in January.

The KOF Business Situation Indicator fell in January after having risen slightly at the end of 2020 (see G 3). While the business situation in the goods-producing sectors is stable to positive, some service industries in particular are struggling. The pandemic is thus driving a wedge between the trends in different sectors of the economy.

Cancelled events, Zoom conferences and looking after children while working from home: the coronavirus pandemic has drastically changed the world of work – including at KOF. In addition, researchers have had to readjust their methodologies and working practices in order to take account of the many facets and fast-moving pace of the coronavirus crisis. Eight KOF economists tell us how COVID-19 has affected their research and what they have learned for their work from the pandemic.

Using a new method, researchers from KOF and ETH have for the first time studied how discrimination occurs on online job boards. They are able to show that discrimination based on origin is widespread – and that the time of day plays a key role. So do online platforms increase discrimination in job searches or, on the contrary, can they be used to create more fairness? Co-author Daniel Kopp discusses the most important findings.

The KOF Business Situation Indicator rose in December after suffering a setback in November (see G 11). Despite the second wave of the pandemic in Switzerland and neighbouring countries, companies started December on a fairly positive note. The situation is nowhere near as tough as in the spring. However, the latest tightening of restrictions and the news about a new coronavirus variant are not included in these survey results.

KOF expects GDP to grow by 3.2 per cent in 2021. However, this forecast assumes that the pandemic situation does not deteriorate any further. The negative scenario predicts growth of only 0.6 per cent. Moreover, the differences between the individual sectors of the economy are considerable. Some have already returned to their pre-crisis levels, while for others this will probably not be the case until after 2021.

The epidemiological situation has deteriorated further in many countries, including across Europe, which is important for Swiss exporters. Although vaccination campaigns are now under way, restrictions are likely to remain in place in many areas. It will therefore be some time before the global economy recovers from the coronavirus crisis, the aftermath of which is likely to be felt for quite a while.

Companies usually hope that investing in digital technology will increase their competitiveness. However, there is no evidence of any direct correlation here. As a KOF study shows, innovation is needed in order to actually raise productivity through IT investment.

Globalisation increased only slightly in 2018. Although economic globalisation has recently grown, the emerging international trade conflicts have revealed their first negative effects. The coronavirus crisis is likely to further slow economic and social globalisation as a result of the worldwide recession and restricted mobility. The most globalised countries are Switzerland, the Netherlands and Belgium.

The KOF Business Situation Indicator reported a minor setback in November. After rising in October, it has recently fallen slightly (see G 17). Although coronavirus restrictions have been tightened in recent weeks, companies are currently in a better situation than they were during the summer months.

Federalism in a crisis: the theme of the next ‘KOF Beyond Borders’ event is hidden in the pun. How are various federalist states doing in combating the pandemic and its consequences? Does this crisis also reveal a crisis of federalism?

Following a sharp rise in the number of infections in the autumn, the Swiss government and the cantons have taken further measures to combat the pandemic. Both factors are likely to have contributed to the fact that Swiss people have again adjusted their consumption. This also affects the measurement of inflation, albeit not as much as during the lockdown in spring. This is illustrated by an updated comparison of the national consumer price index (LIK) with an alternative COVID price index.

The Christmas trade is of great importance for the retail sector. November and, even more so, December are usually the months that generate the highest sales of the year. KOF has therefore taken the pulse of the retail sector. Following a swift recovery in Switzerland and neighbouring countries after the slump in spring, confidence in November fell only slightly in Switzerland but plummeted in Austria.

Brexit has put the issue of independence back on the political agenda in Scotland. This publication examines what economic factors reinforce separatist tendencies. Regional resource wealth plays a central role in this context. In particular, the analysis shows that oil discoveries have a causal effect on the electoral success of Scottish separatists.

The number of international tourist arrivals in the first eight months of this year was 70 per cent lower than it had been before the coronavirus crisis. Although demand in Europe partially recovered during the summer months, rising infection rates are slowing down this recovery. However, Switzerland is not in a bad position when compared internationally: thanks to the strength of its domestic tourism, it has lost fewer overnight stays than other countries.

Is the coronavirus crisis overshadowing the climate debate or is it playing into its hands? KOF’s forecasting conference on 22 October saw representatives from the worlds of business, politics and science discuss in a webinar how lost profits can affect green investment and what significance Swiss climate policy has internationally.

The clock is ticking. If the EU and the UK fail to sign an agreement by the end of December, a no-deal Brexit will become a reality – with drastic consequences for the British. It is estimated that, by 2030, UK GDP would be 2.5 per cent lower than if the withdrawal followed an orderly process and 5.3 per cent lower than without Brexit altogether. Long-term adjustments would not take place for 15 years.

Companies’ business has recently improved noticeably. While the situation in the retail sector is now more encouraging than it has been since 2014, it has not yet returned to pre-crisis levels in many other areas. When asked about their plans for the future, however, companies in some sectors of the economy became more cautious over the course of October.

The coronavirus-specific questions asked in the October Business Tendency Surveys revealed that around 10 per cent of the firms surveyed said that they considered their survival to be at risk. In the hospitality industry this figure is as high as one in three companies, which is also where the pandemic will have the greatest impact on annual sales. In general, smaller firms are more afraid of bankruptcy than larger ones, and there are also regional differences.

The KOF Business Situation Indicator has remained almost stagnant. Whereas it rose sharply in July and August, the indicator hardly increased at all in September (see G 8). After the economy noticeably improved in midsummer, this positive trend is now faltering. The economy is in a precarious position.

Climate change used to dominate the debate – until COVID-19 began to spread. Does the coronavirus crisis eclipse the climate crisis? Or is it indirectly creating a greener economy? This is what we will be discussing at the next KOF Prognosetagung on 22 October, with Swiss Airlines CEO Thomas Klühr, Microsoft Switzerland Director Marianne Janik, Swiss Re expert Nora Ernst, environmental scientist and Green National Councillor Bastien Girod and KOF Director Jan-Egbert Sturm.

More competition, better allocation of resources, higher productivity – that is what European integration should ensure. A recent study of the longer-term effects of integration shows that, while it has led to reforms in product markets, it has had little impact on financial and labour markets. If reforms are brought about nonetheless, this is due not only to the euro but also to the single market.

In Switzerland the proportion of women studying technical subjects is lower than in most other OECD countries. Despite many support programmes, this situation has hardly changed in the last ten years. A study based on new educational data reveals major cantonal differences: in the cantons of Zurich and Zug, for example, twice as many female Matura students embark on STEM courses as in Geneva and Uri.

The KOF Business Situation Indicator rose in August for the second month in a row. However, this increase was significantly lower than the one in the previous month. Swiss companies’ business is improving only very gradually.

Swiss companies are increasingly being confronted with IT security problems. There are significant differences between the various corporate sectors in the area of cyber defence and, in some cases, there is a great deal of catching up to do. Effective IT security is a prerequisite for using digital technologies to increase productivity.

Business in the retail sector improved considerably in July. The results of the KOF Business Tendency Surveys show that the situation is now as satisfactory as it was before the pandemic. Were the events of this spring just a brief aberration for the retail sector?

Almost all industrialised countries now have higher public social spending than they did a few decades ago. How did this increase come about? A recent KOF study shows that globalisation, economic crises, rising unemployment and an ageing population are the main factors affecting social spending. The COVID-19 pandemic is also likely to influence future trends.

The coronavirus crisis substantially changed consumer behaviour during the lockdown. This can lead to a situation where the prices of consumed goods over time differ significantly from those in Switzerland’s national consumer price index (LIK). In order to estimate these differences, KOF has linked the official LIK data with card transaction data and constructed an alternative COVID price index. This suggests that inflation has been underestimated since the beginning of the coronavirus crisis.

The KOF Business Tendency Surveys have revealed that Swiss companies’ fortunes hardly changed in June. KOF’s Business Situation Indicator thus confirms the stabilisation trends prevailing in the Swiss economy. The virus-induced economic freefall had already ended in the previous month. The retail sector in particular showed signs of life again in June. The Swiss economy is likely to have bottomed out for the time being.

Apprentices’ wages, additional benefits for apprentices, and the costs for firms offering apprenticeships: the authors of a new KOF Working Paper have investigated whether these dual vocational training costs are offset by the value produced by apprentices during their training. The findings of a pilot project in Nepal show that companies achieve a modest net benefit when they offer apprenticeships.

KOF has been publishing coincident and leading composite indicators for the global economy every month since January. The two Global Economic Barometers provide timely and highly frequent information. The algorithm used to construct the two barometers is run from the beginning each time. This guarantees the flexibility of the barometer system. At the current edge, the barometers have been quick to identify the economic slump that has accompanied the spread of the coronavirus.

The KOF Business Situation Indicator regained some ground in May after having crashed in the previous month: the indicator is rising very modestly (Graph G 10). Nevertheless, Swiss companies reckon that their current situation is significantly worse than it was during the 2009 financial crisis. Although the Swiss economy is still in recession, it is no longer in freefall.

How high is the ‘start-up rate’ in Switzerland compared with other countries? What is the main motive for setting up businesses in Switzerland? What competences are particularly relevant for start-ups and what factors encourage innovation performance? This article provides an overview of the most important findings of KOF’s research on business start-ups in Switzerland.

The business situation in the Swiss construction sector deteriorated sharply in April. Construction site closures in parts of Switzerland and hygiene regulations are delaying ongoing construction projects. KOF expects construction investment to decline by 2.0 per cent in real terms in 2020.

The COVID-19 pandemic and the measures being taken by the government to mitigate its health consequences are affecting many companies in Switzerland. In order to obtain a timely and comprehensive overview of this impact, Swiss companies’ websites are regularly checked for the use of relevant terms, and these findings are then broken down by company size, sector and location.

Greater labour productivity, more interesting work, easier interaction with colleagues and line managers, more time pressure: KOF researchers asked graduates of higher technical colleges about the extent to which digitalisation is changing their work. The results show that the impact is significant. However, it differs according to gender and age.

COVID-19 is causing the economy to change much faster than usual. To capture these rapid changes, a team of researchers has developed new economic indicators based on Google search trends. The indicator for the perceived economic situation has fallen more sharply in recent weeks than during the financial crisis. Some indicators of private consumption have already reached pre-crisis levels, while others have not yet recovered.

The fight against the COVID-19 pandemic is causing severe distortions in goods, labour and capital markets. However, it takes several weeks or even months for the reality to reach official statistics and econometric models. In the US, important basic statistics are published earlier and in more detail than in many other countries. The first available indicators for March confirm scenario calculations that predicted a sharp recession.

Although large sections of the Swiss economy have got off to a good start in 2020, the coronavirus pandemic is stifling any optimism. The manufacturing, hospitality and retail sectors have come under particularly intense pressure.

Instead of presenting a forecast, this spring KOF has published three scenarios that show how the economy might potentially perform going forward. The baseline scenario assumes a recession in the first half of the year, while the negative scenario predicts a longer-lasting slump. The mild scenario is becoming increasingly unlikely.

The European Central Bank’s main communication channel is the press conferences it holds following its Council meetings. In addition to its decisions on monetary policy measures, the Council also outlines its view of the economic situation in the euro area. Although the subtle differences between the introductory remarks made are often barely perceptible to laypersons, investors and economists react to them and revise their expectations accordingly.

The KOF Business Situation improved further in February, albeit only marginally. As a result, the easing of tensions that was already apparent in January has been confirmed. The Coronavirus epidemic has not yet, for the time being, had much of an impact on the Swiss economy. However, recent developments - in particular in Italy and Ticino - are not covered by the survey results. Aside from this, the basic economic trend is fairly positive at the moment.

In Serbia, a new law on dual vocational education and training has been launched which provides better protection and more rights for students in the workplace. A survey shows that this law has a major impact on the everyday school and work life of young people.

The weak global economic climate coupled with the low propensity to invest abroad held back the Swiss export economy last year. Following also the rapid outbreak of the Coronavirus at the start of the year, this caused major uncertainty for exporters.

Global economic dynamism was relatively weak also last year. Economic policy uncertainties, dwindling world trade and weak demand for investment goods left a major mark in particular on Europe and East Asia. This article looks back over 2019 and examines Switzerland’s economic environment.

A new study shows that globalisation has diminished the income share of the middle class. Even the poorer parts of the population saw their income shares decline, while the shares of high incomes has risen. This effect is driven by developments in transition and developing countries.

The business situation of Swiss companies improved slightly in January. At the moment it is much less challenging than it was in January of last year. Following a very weak first half of 2019, the situation has been stable since the autumn. The Swiss economy has been able to pull out of its downward spiral.

There are frequent reports in the news suggesting that information and communication technologies lead to higher productivity especially for highly educated workers. However, most of the studies consider only the complementary effect of new technologies and tertiary educated workers. A new study investigates the effect these technologies have on workers with different levels of education.

Companies investing in product and production process innovations can achieve a significant increase in productivity, as shown by a study jointly conducted by KOF researchers and the German ZEW Institute. The correlation is particularly strong for companies that are subject to very high levels of international competition. Thus these investments evidently play an important role in securing competitive advantages.

Since 2015 the Swiss National Bank’s base rate has been in negative territory. Do the benefits of negative interest rates outweigh the drawbacks, or vice versa? How is the base rate expected to change over the next few years? And how are the current policies of the SNB, the ECB and the Fed to be assessed? A survey of Swiss economists carried out in December 2019 attempted to cast light on these issues.

Towards the end of 2019, the business situation of Swiss companies slowed down again (cf. G 4). The Swiss economy is held back by the sluggish trend in the manufacturing industry. By contrast, the construction industry and numerous service sectors reported a stabilisation of the business trend. Overall, the difficult international environment continues to place a strain on the Swiss economy.

The euro area economy will pick up some momentum, according to three research institutes: ifo in Munich, KOF in Zurich, and Istat in Rome. Economic growth will rise from its low rate of 0.2% in the third quarter of 2019 to 0.3% in the fourth quarter of 2019. The institutes expect the euro area economy to continue to grow by 0.3% quarter on quarter in each of the first two quarters of 2020.

Recently, there has been lively debate about Switzerland’s role in international tax competition. The author of this article investigates the phenomenon of ‘socio-spatial segregation’, one of the effects of inter-cantonal tax competition. ‘Socio-spatial segregation’ refers to the geographical concentration of households which are similar in terms of criteria such as income, wealth, age or ethnicity.

In November, Swiss companies reported no further slowdown of their business situation. Following a decline in September and October, the KOF Business Situation Indicator went up slightly in November (See Graph 6). Although the Swiss economy picked up to some extent in autumn, the economic environment remained difficult.

The turbulent history of the Swiss franc since the outbreak of the financial crisis has increasingly raised the question as to where the point of equilibrium is for the Swiss franc exchange rate. Although there cannot be any absolute point of equilibrium, attempts have nonetheless been made to assess the mispricing of the Swiss franc using the Behavioural Equilibrium Exchange Rate (BEER) model.

Increasing numbers of university students do internships during their time at university to prepare themselves for the labour market. However, there is little evidence whether or not such an investment actually pays off. A new study investigates this question.