No. 143, September

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.

In order to mitigate the consequences of the coronavirus crisis for the self-employed and businesses, Switzerland has relied on three instruments: short-time working, income support for the self-employed, and so-called ‘COVID-19 loans’. Researchers have investigated which firms have made the most use of these instruments. One of their findings is that companies that were already in debt before the crisis have made particularly frequent use of COVID-19 loans.