Gross domestic product in the first quarter of 2020: coronavirus shrinking the economy
Bern, 03.06.2020 - Switzerland’s GDP fell by –2.6 % in the 1st quarter of 2020, after rising by +0.3% in the previous quarter*. 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.
Key trading partners also saw their economic situation deteriorate massively, which hit sectors that are sensitive to the economic situation such as machinery and metals, as well as precision instruments and watchmaking. Value added in manufacturing (–1.3%) reported the sharpest fall since the Swiss franc shock in early 2015, accompanied by noticeable drops in the exports of many sectors. However, the sizeable chemical and pharmaceutical product export category and merchanting grew, boosting the total exports of goods**(+3.4%). Imports of goods**
(–1.1%) dipped in line with declining domestic demand.
The coronavirus pandemic also has an impact on the production of statistics. In line with the recommendations of Eurostat, the basic data and methods were subjected to an indepth check for the current GDP calculation to avoid distorting effects due to the coronavirus pandemic***. In particular, the latest information on advance notifications and applications for short-time working were taken into consideration, in addition to the existing data sources. The results were also compared with the containment measures in accordance with the Federal Council’s COVID-19 Ordinance 2. Finally, all seasonal adjustment models were reviewed and amended as required. Nevertheless, in view of the current data situation it is possible that in the coming quarters more significant revisions than usual will become necessary.
*Real percentage changes on the previous quarter. Data and further information: www.seco.admin.ch/gdp.
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