Swiss GDP fell more than forecast in the first quarter

According to the report from Federal Statistical Office, Switzerland’s GDP fell by –2.6 % in the 1st quarter of 2020, after rising by +0.3% in the previous quarter. Economists had expected a 2.0% decrease. Due to the coronavirus pandemic and the measures to contain it, economic activity in March was severely restricted. The international economic slump also slowed down exports.

The service sector was particularly affected by business closures and restrictions. Value added dropped for almost all services. Historic declines were seen in trade (–4.4%) and accommodation and food services (–23.4%), which had been struggling with falling numbers of foreign guests since back in early March. Transport and communications (–5.1%) also posted its lowest negative figure in 30 years in the wake of reduced timetables and flight schedules. Additionally, the Healthcare sector (–3.9%) experienced a historic decline in value added, as various medical treatments were temporarily suspended. By contrast, public administration (+0.8%) and finance (+2.3%) supported GDP, with the latter sector benefiting from growing foreign trade in particular. However, exports of services (–4.4%) decreased overall, as did imports of services (–1.2%). As a result of the health policy containment measures and considerable uncertainty, private consumption (–3.5%) suffered a widespread slump. Since shops were closed from 17 March, purchases of furniture and clothing dropped sharply, as well as spending on mobility, leisure and health. Investment in construction (–0.4%) and investment in equipment (–4.0%) also contracted. The only domestic demand component to underpin the economy was government consumption (+0.7%). Overall, final domestic demand (–2.7%) recorded the biggest decline in recent decades.