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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 business fortunes of companies in Switzerland deteriorated significantly in March, with the financial and insurance services sectors primarily responsible for the less encouraging situation (see Chart G 9). The changes in the other sectors of the economy in March were comparatively small.

The KOF Business Situation Indicator rose slightly again in January. The Swiss economy’s recovery is thus continuing at the beginning of the new year. The outlook for business in the near future remains predominantly positive. However, it has been dampened and is no longer as encouraging as it was at the end of last year.

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.

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.

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.

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 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.

The KOF Investment Survey estimates the causal effect of the COVID-19 pandemic on the investment activity of Swiss companies. According to this survey, Swiss companies have scaled back their plans to invest in equipment during the current year by 7.3 percentage points and have reduced their plans to invest in research and development by 14.9 percentage points. This has far-reaching consequences for the further course of the recession and the dynamics of the subsequent economic recovery.

Last year, export companies managed to emulate the export figures of the period before 2008. Finally, foreign trade appears to have recovered from the recession and the Swiss franc shock.

The significant upturn in the global economy is also stimulating the Swiss economy. Foreign trade is benefitting from this situation. Investments in plant and equipment are also picking up. GDP is expected to expand by 2.3% in 2018 and by 1.7% in 2019. The labour market situation is improving as employment figures are going up and the unemployment rate is declining. These are the results of the current KOF Economic Forecast.

With the Christmas business just around the corner, Swiss consumers appear to be quite optimistic – a fact that should be appreciated by domestic retailers. However, this year is likely to have been another dynamic one in terms of cross-border shopping. It remains to be seen how much money will roll in for domestic retailers and how much they will be forced to surrender to their competitors across the border.

According to the latest KOF Economic Forecast, the next two years look good for the Swiss economy. Aside from positive international trends, this is also due to special factors, such as licence revenues from sport events. The labour market is recovering with a slight time lag and prices are slowly picking up again.

After turbulent times for a large number of Swiss businesses, the available economic indicators, such as the KOF Economic Barometer and the KOF Business Tendency Surveys, are now pointing towards a somewhat more optimistic assessment of Swiss economic performance. In terms of overall economic development, the KOF is therefore forecasting Swiss gross domestic product (GDP) growth of 1.5 per cent this year and (unchanged) 1.9 per cent next year.