Switzerland set to avoid a recession in 2023, but economic threats remain
A new report by Economiesuisse - an umbrella organisation for business - has predicted that while the Swiss economy will take a hit in the coming months, unlike much of the rest of Europe, it will avoid a recession and inflation will remain low. However, with worker and skills shortages persisting, there remains a significant risk of an economic downturn.
Post-COVID boom caused major economic problems worldwide
In its report, Economiesuisse explained that the sudden reopening of global economies after the end of COVID restrictions has led to major supply problems and price rises for both natural resources and manufactured goods - a phenomenon supercharged by Russia’s invasion of Ukraine. In addition, it noted that the loss in purchasing power felt across the world has made the global economy much more fragile.
Switzerland’s main markets for goods and services - the United States, Germany, France, Italy and the United Kingdom - are in a tense economic situation with recessions looming, although the report did note that signals from the German and American economies have been quite positive in recent months. As a result, the organisation predicted that “international developments” will slow Swiss economic growth in the coming year.
Switzerland to avoid European recession, report predicts
Despite global economic conditions, the union predicted that Swiss gross domestic product will increase by 0,6 percent in 2023. While this is a significant downgrade on predictions made earlier this year, it will mean the alpine nation will avoid a recession - unlike a number of its European neighbours.
Economiesuisse explained that “the Swiss economy is well diversified, strongly focused on specialities and less on price-sensitive mass markets.” For example, a number of the largest international companies in Switzerland operate in the medicine and finance sectors - industries notably resilient to economic shocks abroad.
Worker shortages and inflation still a concern in Switzerland
However, while the Swiss economy may be doing better than other countries, the report conceded that threats do remain. For example, rising interest rates on mortgages and higher prices for energy are likely to impact those looking to buy or rent property in Switzerland. In addition, real wages are set to fall in 2023, as average increases in salaries are predicted to be between 0,5 and 0,7 percent lower than the inflation rate, which is expected to be 2,9 percent in 2022 and 2,7 percent in 2023.
Finally, Economiesuisse said that shortages in skilled labour and price increases “will persist and weigh on economic growth.” While it remains positive for now, the organisation concluded that “the ground remains slippery - the risks of an economic downturn are high.”