(Bloomberg) --
Switzerland's economy is expected to suffer less of a beating from the Covid-19 crisis than others in Europe, according the KOF Swiss Economic Institute.
While economic conditions are still challenging -- roughly 14% of the 4,500 firms surveyed believe their chance of survival is at serious risk -- KOF data show companies' fortunes are gradually improving. Prospects for the Swiss labor market have also brightened slightly.
With the country benefiting from a well-diversified economy, including sectors like pharmaceuticals and financial services that haven't been hammered by the pandemic, the organization upgraded its forecast for the year.
Its base scenario, which assumes there isn't another surge in coronavirus infections, is for a 4.9% decline in Switzerland's gross domestic product this year, a somewhat more optimistic outlook than issued June. Yet even with a recovery in 2021, GDP at the end of next year will still not have returned to its end-2019 level.
Should there be another exponential surge in infections, requiring parts of the economy to be shut down, the KOF sees GDP sinking 6% in 2020. While severe, that's still only about half the rate of contraction the International Monetary Fund expects for France, Italy and Spain.
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