Already the fifth wave. At least two half confinements on the counter and great fatigue in Swiss homes. A feeling that must cause exhaustion in restaurants, fitness centers or even theaters, the first secondary victims of the Covid-19 pandemic.
Despite their limits and imperfections, economic indicators are nevertheless a reminder of how well Swiss companies have weathered the shocks they have experienced since the spring of 2020, thanks to a smart cocktail made up of resilience and adaptability, solid foundations, tools high technologies, but government shock absorbers.
While all eyes were on South Africa with the appearance of the Omicron variant, the Secretariat of State for the Economy announced on Friday that Swiss GDP was up 1.7% in the third quarter, above pre-pandemic levels. The observation also applies to employment: in sectors such as IT, logistics or catering, there is even a shortage of workers. In October, the unemployment rate was estimated at 2.5%, while nearly 60,000 people were using RHT (short-time working) in August, according to the latest available figures. That is 240,000 fewer than a year earlier.
Because the Swiss economy has come a long way. The value it created fell 6% in the second quarter of 2020, down 2.3% over the whole of last year. The variation is similar to that observed during the subprime crisis in 2008-2009, but much lower than the 6% drop seen during the oil shock of the 1970s.
The keys to resilience: diversification and social support
The strength of the recovery seen this year remains a challenge: “Switzerland is currently an exception, both in terms of economic growth and inflation,” noted David Marmet, chief economist at Zurich Kantonalbank, in a note on the situation Tuesday morning. To explain this Swiss singularity, the expert puts forward several reasons: the country’s good sectoral diversification, a weak deindustrialization and the democracy of agreement. Before he ends up questioning himself, “Maybe it’s just luck?”
A lucky star watching over the fate of Switzerland? In Is Geneva ready for the next crisis? Giovanni Ferro Luzzi and Sylvain Weber cite many other explanatory factors. Economists from the Institute for Applied Research in Economics and Management (IREG) presented the results of their research on Tuesday. A work commissioned by the Cantonal Bank of Geneva (BCGE) and the Geneva Chamber of Commerce, Industry and Services (CCIG).
According to them, the diversity of the economic fabric – both at the Geneva and Swiss levels – has largely contributed to cushioning the downturn dictated by SARS-CoV-2. “Two months after the lockdown started, exports had already returned to pre-crisis levels, Sylvain Weber notes. For example, the pharmaceutical industry and financial activities have shown great resilience in the face of the crisis as demand for their products has remained strong.”
Quickly pulled by the Confederacy, the RHT also played a vital role. It is “a very good measure that probably saved a lot of jobs”, emphasizes Giovanni Ferro Luzzi, referring to another important tool in the arsenal of the perfect manager of the economic crisis: “In the 1930s we realized how important it is to provide liquidity to companies This is how central banks have reacted in the last three bubbles.
No “crystal ball”
Could this capacity for economic resistance find its physical limits, stop working under new incarceration? “We don’t have a crystal ball,” responds Giovanni Ferro Luzzi. It is true that a new incarceration could clearly harm certain businesses, especially in the hospitality or transport sector. But if the aid continues, it should help them get through it.” “We have also adopted new habits. It is likely that the reduction in activity will be less brutal if there were a new incarceration,” adds his colleague.
“What we hope to avoid is tipping over in a W-shaped scenario. [enchaînement de fortes baisses et de reprises, ndlr], concludes Vincent Subilia, director of the CCIG. Because you have sectors for which the crisis could become structural and could have consequences for, for example, Geneva’s tradition of international hospitality. Just look at the impact of this Sunday’s cancellation of the WTO ministerial meeting for its hotels, or the closure of the airport, which has served Geneva’s economy for a hundred years.
As the pandemic continues, it could also lead to fundamental changes, such as the reduction in business travel in favor of video conferencing. The IREG study also points to a modal shift in mobility, with many people opting for their own mode of transport at the expense of the bus or train.
Changes that Swiss companies will also have to take into account if they want to continue to surprise, fascinate and challenge economists around the world.