October

The KOF Economic Barometer falls in October for the first time after a brief recovery phase. It now stands at 106.6 points, 3.5 points lower than in September (revised from 113.8 to 110.1 points). The economic outlook for Switzerland is subdued in view of the pandemic situation and the restrictions that are likely to result from it.

The KOF MPC figure for 29 October 2020 is 0.00. At today’s meeting, the ECB’s Governing Gouncil communicated that it will recalibrate its instruments to counteract the impact of the pandemic on the projected inflation path in December.

Although the situation in the tourism industry has improved since the summer, this sector is now facing severe headwinds again. KOF expects around one-third fewer European guests to come to Switzerland in the winter season than last year. Tourists from overseas markets will mainly stay away. The total number of overnight stays is likely to fall by 30 per cent this winter. The sector is expected to suffer a loss of more than 10 billion Swiss francs for the 2020 tourism year as a whole.

The easing of the pandemic situation in the summer improved the outlook for economic activity. However, the rising number of new infections has heightened uncertainty again. KOF has therefore constructed two scenarios for the economy going forward. Under its baseline scenario it expects GDP to contract by 3.6 per cent this year (2021: growth of 3.2 per cent). If the pandemic situation continues to deteriorate, however, GDP is forecast to fall by 4.9 per cent (2021: growth of 1.5 per cent).

The corona pandemic leaves substantial marks in the German economy and its impact is more persistent than assumed in spring. In their autumn report, the leading economic research institutes - amongst them the ifo Institute and KOF - have revised their economic outlook downwards by roughly one percentage point for both this and next year. They now expect gross domestic product to fall by 5.4 percent in 2020 (previously -4.2%) and to grow by 4.7 percent (5.8%) in 2021 and 2.7 percent in 2022.

The Coincident and Leading Global Economic Barometers move in opposite directions in October. The Coincident Barometer maintains a rising tendency, albeit at a clearly slower pace than in the previous months. Despite its decline, the Leading Barometer continues to show a recovery in global GDP. The slowdown, respectively decline in the indicators suggest that after a first strong rebound, the pace of recovery is to weaken.