No. 147, January

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.

The coronavirus crisis is causing Switzerland’s national debt to rise. There is already vigorous debate about how to respond to this increase. However, Swiss public finances are still in good shape even in the wake of the crisis. Calculations show that the country’s debt ratio should fall relatively quickly even without fiscal austerity.