A confident economy, despite the pandemic

Geneva's GDP is expected to grow by 4.0% in 2021, which will partially compensate for the -4.0% drop in 2020.

A confident economy, despite the pandemic

Geneva's economy is benefiting from the recovery in manufacturing (pharmaceuticals and watches) due to a revival in international trade. In contrast, other sectors, such as hotels and restaurants, are in deep crisis, as reflected by the increase in the unemployment rate. Interest rates in Switzerland will remain at their lowest and the CHF will retain its comparative strength.

Source: Thomson Reuters, BCGE.
The data contained in this document is based on reliable statistics: it does not, however, engage the responsibility of BCGE.

Resilience of the Swiss economy

The recovery of the world economy will differ from region to region in 2021. The Asian countries, particularly China, have already returned to positive growth. Europe and the United States are likely to follow suit but without a direct return to economic activity comparable to 2019. Against this backdrop, the sectoral specialisation of the Swiss economy (with pharmaceuticals and food) represents the basis for its resilience. After a 2.9% drop in its GDP in 2020, well below that of its neighbours, GDP in 2021 will increase by 3.2%, thus offsetting the losses caused by lockdown measures. 

The economic consequences of the health crisis have no influence on the extremely accommodating monetary policy implemented in recent years by the Swiss National Bank (SNB) following the example of the European Central Bank (ECB). The CHF will remain a strong currency and the SNB will continue its foreign exchange interventions to ensure that the Swiss currency does not appreciate too quickly. Interest rates, on the other hand, will continue to be negative, due to uncontrollable structural forces.

Geneva: Commodity trade and exports boost recovery

Geneva's GDP is expected to grow by 4.0% in 2021, offsetting the historic fall in 2020. This increase is due to the recovery of international trade in the manufacturing industry, in which Geneva participates through pharmaceuticals and watchmaking, which are benefiting from growing demand from Asia. Commodity finance and manufacturing exports account for 25% of Geneva's GDP. Other sectors also contribute to this trend, such as healthcare, financial services and business services (52% of added value creation). Although the two phases of lockdown led the population to reflect seriously on their housing conditions, they had little impact on the real estate and construction sectors, which are contributing to the recovery.

At the same time, the situation on the labour market is deteriorating. Hit hard by the health measures, the hotel and restaurant, travel and entertainment sectors are recording significant losses. Although these sectors account for only a modest share of added value creation, they do, however, represent a significant proportion of employment in the canton. This explains why the unemployment rate is expected to rise to 5.7% in 2021; a rate that may not improve despite the recovery, as the unemployed are often poorly qualified workers who have difficulty finding work in other sectors.

BCGE advises companies and individuals

The bank recommends that companies carry out a thorough analysis of financial options, particularly in terms of debt and liquidity management, in order to best neutralise or even benefit from the impact of negative interest rates. Private individuals may be able to avoid a surplus of cash and liquid assets through a regular financial check-up combined with an analysis of their assets and thus achieve a healthy diversification of their assets and optimal pension planning.