Despite the threat of bottlenecks in the energy supply, Switzerland is not expecting a plunge into recession this year, said the government’s chief economist on Sunday.
Despite the effects of the war in Ukraine on energy prices, the Swiss economy is doing “well”, said Eric Scheidegger of the “SonntagsZeitung”.
He said it’s up to businesses to prepare for potential power outages over the winter months.
“We may have to downgrade our economic forecast for next year. The revised forecast will be released on September 20th. However, we do not expect a recession this year,” said Scheidegger.
“We are threatened with an energy supply bottleneck in winter. If there are persistent production disruptions in the EU and we have a gas shortage ourselves, it will become problematic.
“In our negative scenario, we expect zero growth for 2023 instead of growth of almost two percent.”
Despite the threat of power cuts and the effects of the Ukraine war, Scheidegger does not see a serious economic crisis in Switzerland.
“The economy is still doing well at the moment. Current indicators show that the economy in this country also developed well in the second quarter – after the outbreak of war in Ukraine,” he said.
“Economic support measures such as general perks or tax breaks are therefore currently neither necessary nor helpful,” he added.
– ‘Foreseeable events’ –
Scheidegger said the Swiss economy is less vulnerable to high energy prices than other European countries because gas accounts for just 5 percent of total energy use.
He said the government would discuss possible measures to curb high energy prices in the coming weeks, which could include lowering health insurance premiums for low-income households.
The official at the State Secretariat for Economic Affairs said aid to businesses during the Covid-19 pandemic cannot become the norm in economic downturns.
“It has been known since spring that power outages can occur in winter. Companies have time to prepare for this,” he said.
“Businesses can and must consider this operational risk… it is up to businesses to prepare for foreseeable events.”
On inflation, he said Switzerland is “an island of bliss” compared to the United States, and inflation is likely to fall before the end of the year.
“At 3.4 percent, inflation here is much lower than in other countries. Core inflation — inflation excluding fresh food, energy and fuel — is 2 percent,” he said.
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