Is there a recession in Switzerland?

The Swiss economy is doing surprisingly well at the moment. But next winter, much will depend on whether the country can avoid gas and power shortages.

Economically, a lot will depend on the power supply in the coming winter.

Steffen Schmidt / Keystone

«Dr. Google »knows: People are looking for the word recession more often again. This is particularly pronounced in the USA. There, according to the service, gave Google trending more people have entered the search term recession in recent weeks than when the corona pandemic broke out in March 2020.

In Germany, too, people recently found out more about a possible recession. And even in Switzerland, search queries have increased somewhat – even if the extent is much lower than in the USA or Germany.

Robust growth since spring

So recession fears are spreading. But for Switzerland this is in striking contrast to the economic situation. The Swiss economy is doing surprisingly well at the moment.

This is shown by a timely indicator of weekly economic activity from the State Secretariat for Economic Affairs (Seco). Economic output grew strongly in the spring. And the positive momentum continued into the final weeks of July.

The Swiss economy is robust in the summer

Indicator of weekly economic activity, change from the fourth quarter of 2019, in percent


First lockdown due to Corona (March 16, 2020)


Second lockdown due to Corona (January 18, 2021)


Invasion of Ukraine by Russia (February 24, 2022)

According to Seco, growth has been broadly based in recent months. Since the end of the corona restrictions, people in Switzerland have been consuming more again. The good situation on the labor market, where staff is being sought and wages are rising, is supporting income. Industry and foreign trade have also developed well in recent months.

Better economy than in the USA and in the euro zone

Switzerland is therefore experiencing a good summer in terms of the economy. This was not necessarily to be expected after the outbreak of the Ukraine crisis at the end of February.

The development in Switzerland is also more positive than in the USA, where economic output has recently declined slightly after a phase of overheating. And things are going a little better in this country than in the euro zone. Leading indicators there point to a contraction in industry, for example.

How the industry works

Purchasing managers’ indices for industry

One could therefore be optimistic – if the outlook for the coming months were not gloomy. Switzerland has to deal with the fact that there could be a gas and electricity shortage in winter. This threatens to burden the economy and reduce the well-being of the population.

Gas crisis will weigh on economic activity

The economists at Credit Suisse recently examined how badly a gas crisis could affect the Swiss economy. It is true that Switzerland is less dependent on natural gas for its energy supply than other European countries, they write in their analysis. Still, the economy could be affected through various channels.

The integration with the European economic partners is particularly relevant. For example, a slight recession is expected for Germany, which is heavily dependent on Russian natural gas, in 2023. This puts a strain on the Swiss export industry, which does a lot of business with German companies.

Preliminary products from Germany and other European countries could also be missing because the supply chains in the chemical or steel industry are stalling. On the other hand, the CS economists consider the possibility of gas rationing for Swiss industrial companies to be a marginal risk, since the companies can probably prepare themselves sufficiently.

Cooling down, but no slump

Overall, the economy in Switzerland is likely to cool down towards winter due to the gas crisis. But there shouldn’t be any contraction in economic output: “We don’t expect a recession,” says CS. The Swiss economy is expected to grow by around 1 percent in 2023, following a forecast of 2.5 percent this year.

It sounds similar with the Seco. The chief economist of the federal government, Eric Scheidegger, said recently in Interview with the “Sunday newspaper”: “In our negative scenario, we expect zero growth for 2023 instead of growth of almost 2 percent.” That would be an “emergency stop” but not a full-fledged recession.

Electricity crisis would have enormous repercussions

The big unknown, however, is a possible power crisis. If you talk to Swiss companies these days, you get the impression that they will be able to deal with the gas problem. Many companies are preparing and are already converting production processes to other energy sources such as heating oil.

A power crisis, on the other hand, would have completely different dimensions. Electricity is needed not only everywhere in the economy, but also everywhere in people’s lives. In the third stage of its electricity emergency plan, the federal government provides for a prescribed reduction in electricity consumption for companies of 10 to 20 percent. Even this step would mean significant production losses and could thus severely reduce economic output.

Company representatives also describe the fourth stage of the electricity emergency plan as a “nightmare scenario”. This would result in rolling shutdowns in entire regions for four hours, for example. Many production processes could then no longer be maintained. For example, cold chains for food would be broken.

There are still no estimates of how badly such an acute power crisis would affect the Swiss economy. But one thing is clear: It is also of enormous importance for the economy that there is sufficient electricity in the coming winter.

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