No. 139, April

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 Indicator fell significantly in March, plunging to its lowest level since spring 2017. Companies are particularly concerned about developments in the near future: demand forecasts are being cut sharply in all of the sectors surveyed. The coronavirus pandemic is casting its shadow over the Swiss economy.