22 September 2020 – Switzerland’s French-speaking cantons are all suffering economically from the public-health measures in the country, the absence of foreign tourists, and the slowdown in global output in 2020 – estimated by the IMF at 4.9%. Today’s study shows, however, that the Covid-19 crisis has had less of an impact on this region (where GDP is expected to fall by 5.7% according to the CREA Institute) and in Switzerland as a whole (where GDP is expected to fall by 6.2% according to the State Secretariat for Economic Affairs, SECO) than in the main developed economies. According to the IMF’s 2020 forecasts, GDP will fall by 8.0% in the United States and 10.2% in the eurozone. This 13th edition of the study on French-speaking Switzerland’s GDP was published by the region’s six cantonal banks, in collaboration with the CREA Institute and Forum des 100 (an annual conference held by Swiss newspaper Le Temps).
Both French-speaking Switzerland and Switzerland as a whole have benefited from their diversified economy and federal, cantonal, and private-sector initiatives, such as compensation for reduced working hours, Covid-19 bridge loans, and flexibility with rent and loan payments. Moreover, economic activity began recovering at the end of April, according to SECO. The increase in joblessness remains moderate in French-speaking Switzerland, with the unemployment rate only rising from 3.1% in August 2019 to 4.4% in August 2020. This rate reached 6% during the 2009 crisis.
The recovery is expected to be gradual, and GDP in French-speaking Switzerland is forecast to grow by 4.5% in 2021, just below the national average (4.9%). Globally, the 5.4% rebound forecast by the IMF is expected to be driven by emerging markets more than developed economies.
In the French-speaking region of Switzerland, the crisis has affected all sectors of the economy, but to varying degrees. Chemicals/pharmaceuticals, construction, and public and semipublic services should experience limited declines this year, while the outlook for the machine industry, transport, and hotels and restaurants is sharply negative. If the economy recovers as expected next year, however, all sectors should bounce back. The sectors that are suffering the most in 2020 should be among the ones that show the highest growth levels in 2021.
The various cantons of French-speaking Switzerland are exhibiting a similar pattern, in line with their economic structure. Jura and Neuchâtel, with their focus on manufacturing, have been hit harder in 2020 but stand to recover more quickly in 2021. For Fribourg and Valais, whose secondary sectors are more stable thanks in part to the relative importance of construction, the two-year outlook is less negative than the regional average. Geneva and Vaud’s economies have been weighed down by troubles in some of their key sectors – for Geneva, sectors related to its role as an international hub, and for Vaud, its business services sector.
Visibility is extremely low. There is no way to predict how the pandemic will play out around the world, how the authorities will react, and how big of an impact future safety measures will have. This crisis has also come at a time when the global economy is still feeling the effects of the 2008–2009 economic and financial crisis as well as trade-related tensions. Other risk factors must be taken into account as well, such as the Brexit negotiations, the Swiss-EU relationship, and the strength of the Swiss franc.
