The State Secretariat for Economic Affairs on Monday said the economic slump due to the impact of the coronavirus pandemic in Switzerland this year is set to be less serious than feared earlier.
According to expert group of the federal government, the economy will shrink only 3.8 percent in 2020 compared to the previous projection of -6.2 percent.
Nonetheless, the estimated 3.8 percent fall would be the strongest decline since 1975.
The economy started to swiftly make up lost ground at the end of April and was less negative than assumed in June, the SECO said. The recovery is set to continue in the third quarter.
However, the government lowered the growth outlook for 2021 to 3.8 percent from 4.9 percent.
The economic output would return to its pre-crisis level only towards the end of 2021, provided there is no further widespread lockdown.
In September, the central bank had forecast the economy to contract by around 5 percent this year.
The government said the most significant economic risks are still those linked to the coronavirus pandemic and the responses of economic players and politicians to the situation.
The labor market is expected to see further drops in employment and the average unemployment rate for 2020 is likely to be 3.2 percent compared to June forecast of 3.8 percent, the SECO said.
For 2021, the jobless rate is expected to rise to 3.4 percent versus previous projection of 4.1 percent.
The government forecast consumer prices to drop 0.7 percent this year and 0.1 percent next year. In June, prices were expected to decrease 0.9 percent in 2020 and 0.3 percent in 2021.
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