May

In May, the KOF Economic Barometer reaches the lowest value in its history. After the exceptionally strong decline in April, the Barometer falls again, but at 6.5 points, the minus is much smaller than in the previous month. The rapid decrease of the last three months is more pronounced than, for example, during the financial crisis in 2008/2009. The Swiss economy is in a sharp recession.

The absence of visitors from abroad will not be compensated for by domestic tourists in summer. Towns and cities must expect 50 per cent fewer overnight stays in the summer months, while the Alpine region is set to see a decrease of 20 to 30 per cent. During the entire 2020 tourism year the number of overnight stays is likely to fall by more than 30 per cent compared with last year. The hotel sector will lose more than CHF 900 million in value added.

Economic activity should bounce back in the summer once the current lockdown restrictions are eased. Nevertheless, KOF expects value added to decline by a significant 5.5 per cent for 2020 as a whole. GDP growth should then rebound to 5.4 per cent in 2021. Spending on social security will rise sharply this year. At the same time, the federal government, municipalities and cantons must expect tax revenues to fall by a total of more than CHF 25 billion this year and the next years.

The Coincident and Leading Barometers for the Global Economy for May demonstrate a deepening of the crisis caused by the Covid-19 pandemic. After the third and so far most significant of these three declines, the two indicators reached the lowest levels of their respective series since their beginning in 1991. This signals an unprecedented impact of the pandemic on World GDP for the second quarter of 2020.

The KOF Business Situation Indicator fell extraordinarily sharply in April. In the face of the COVID-19 pandemic, companies reckon that their business is faring even worse than during the 2009 financial crisis, and they expect this situation to deteriorate further in the coming months. The coronavirus continues to have the economy firmly in its grip.

Short-term prospects on the Swiss labour market have deteriorated sharply as a result of the COVID-19 pandemic. The KOF Employment Indicator has fallen to -19.9 points and is currently lower than at the height of the financial and economic crisis in 2008/2009. With the exception of the insurance industry, all sectors are affected by this decline.