No. 149, March

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.