Switzerland is one of the hardest hit countries by the novel COVID-19. Being a popular tourist destination, the state was hugely exposed to this contagion through visitors from all over the world. Whether the government did a plausible job to protect its economy or not, is not so hard to see if you look closely.
The world over, faced an unprecedented economic mayhem as countries laid desperate measures to contain the disease. Apparently, the lives of people matter, no government could overlook that fact. Nonetheless, the cost of saving human lives also involved temporarily suspending some economic activities. While this sounds irresponsible, the human race didn’t have many cards on the deck.
The COVID-19 situation in Switzerland
Early this year, Switzerland imposed restrictions on public life and businesses to minimize the spread of COVID-19. The number of new cases were soaring at a tremendous rate and this was one way of containing it. Later, beginning in April, the country started re-opening and allowing some businesses to resume. Although this was a necessary maneuver, some damage was caused.
Effects of COVID-19 on Swiss Business
We all wonder if any country did enough to combat this disease. To date, the world has lost close to half a million people to this pandemic! But that’s not all; stock markets also tumbled and the global economy contracted. Some of the effects of COVID-19 to Swiss business were:
Interrupted supply chain
Apparently, this problem is still affecting a number of EU member states today. Swiss companies faced the challenge of an interrupted supply chain. Modern industries rely on outsourcing materials for their productions. When some countries fail to deliver, it has a ripple effect on the global economy.
During the country’s lockdown, there was delay of deliveries owed by the closure of industries and ineffective movement of goods from one place to the other. Some raw materials that were needed for the manufacture of goods were depleted.
The closure of international borders affected the country’s exports. The decrease in sales was not only on international business but also on local business. The travel restrictions and the prohibition of personal contact with customers made it really hard to do business.
On the other hand, industries could not operate at full capacity. Engineering jobs that required technical people from foreign countries could not continue. If a company needed new machines to be installed and or their old ones repaired, it could not be done easily. Thus, there was a general decrease in stocks.
The country’s tourism sector also suffered a heavy blow. In Switzerland the tourism industry contributes around 2.8% of the country’s GDP. In monetary value, this is a staggering CHF 17.4 billion. The temporary shutdown of the tourism sector meant a dramatic drop in the number of visitors who came into the country. As you can guess, it resulted in lower revenues.
Reduced economic growth
The general decrease in supply and demand which occurred during the lockdown significantly affected the economy. Although the government increased its spending to assuage the impacts of the pandemic, damages could not be averted totally.
Focus Economics panelists anticipate a GDP contraction of 6.1% by the end of this year. From the forecasts made in May, the GDP was observed to be down by 0.9 points. It will be a while before investors like what they see on the stock market.
The government endorsed measures which are specific to various sectors of the economy. This was done to maintain a balance; to effectively sustain business and to protect the general wellbeing of people.
Switzerland has been successful in safeguarding jobs; assuring that people get their normal wages and supporting small businesses. The economic stimulus packages helped to effectively prevent bankruptcy and other financial pitfalls.
Since no vaccine has yet been produced, COVID-19 is likely to stay for a little longer. The government of Switzerland made provisions that allow the payment of mortgages, leases, loans and other fiscal disparities to be delayed. This waives late payment penalties that individuals or companies would face under normal circumstances.
Direct and indirect Tax measures
Companies were allowed to postpone deadlines of tax payment without being charged interest on arrears. Interest rates were reduced to 0.0% for incentive taxes, VAT, some customs duties and special consumption taxes. This regulation will be active until year end. However, withholding tax and stamp duty will not benefit from these privileges.
Switzerland’s Reaction to the economic meltdown
In spite of these figures, the government of Switzerland could not have done a better job of protecting its economy. On 13 March, the government introduced effective measures of cushioning the economy from the effects of COVID-19. About CHF 8 billion was directed to this cause. Later on 20 and 25 March, the Federal Council approved yet another economic stimulus package of CHF 32 billion. At this point, over CHF 40 billion became available for the implementation of measures to counter the impacts of COVID-19.
After further assessments, another CHF 20 billion was injected into the economy on 3 April 2020. Suffice to say, Switzerland had commitment to save its companies against the prevailing situation.
In brief, what’s COVID-19?
COVID-19 is a newly discovered infectious disease that is caused by coronavirus. The term COVID-19 was derived from Coronavirus Disease 2019. This contagion is known to cause flu like symptoms that range from mild to moderate symptoms in most cases. However, aged people and those with underlying medical conditions such as diabetes, heart diseases, respiratory problems and cancer have shown to be more vulnerable to the disease.
The World Health Organization (WHO) declared this disease a ‘’pandemic’’ that requires a stronger commitment by all individuals, organizations and governments to eradicate it.
Symptoms of COVID-19
The mild symptoms of this dreadful disease are sneezing, coughing, sore throat, aches, conjunctivitis and loss of smell and taste
In some instances, patients may show acute symptoms such as:
- Shortness of breath
- Chest pain
- Loss of speech
How to mitigate its spreading?
Primarily, COVID-19 is spread through droplets that include discharges from the nose or saliva. When an infected person coughs or sneeze; it’s imperative to exercise respiratory etiquette (e.g. coughing or sneezing into a flexed elbow).
Health experts encourage people to stop making unnecessary movements; maintain a social distance of 2 meters in public places; practice personal hygiene by washing hands and avoiding handshakes. The washing of hands and cleaning of surfaces should be done with alcohol based detergents.
The Final Verdict
To a larger extent, companies in Switzerland were not affected much compared to businesses in other states. Switzerland did not indulge too long under ‘’lockdown’’ restrictions, which evidently have negative effects on business. At the same time, the government introduced measures that saved companies from their hardships.