Swiss Economy Seen Tipping Into Recession on Virus Shutdowns

(Bloomberg) -- Switzerland is sinking into recession because of business closures to combat the pandemic, according to economists surveyed by Bloomberg.

While the nation has less-stringent rules on social distancing than neighboring countries, shops, restaurants and leisure facilities are still closed at least until the end of February.

The median forecast was for a 0.7% drop in gross domestic product in the final quarter of 2020, and a further contraction of 0.6% in the first three months of 2021. Figures for the end of last year are due later this month.

Like the European Union, Switzerland has been slow to roll out its vaccination program. Authorities have raised the prospect of extending the current shutdown into March, due to the prevalence of mutated variants of the virus.

UBS Group AG economist Alessandro Bee cut his first-quarter outlook because of the latest virus restrictions, but said he’s “confident that the recovery will regain momentum from the second quarter onward.”

Read more: Super-Rich and Punctual Switzerland Is Also Behind on Vaccines

Switzerland’s full-year GDP slump in 2020 was probably the biggest since the 1970s, though the crisis promises to be less severe than in other European countries.

Unemployment has risen only moderately, thanks to state furlough programs. The government is likely to increase its support for crisis-hit firms next week.

Swiss National Bank President Thomas Jordan had signaled momentum would be weak during the winter months and that the economy wouldn’t hit its pre-crisis level until next year.

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