Covid-19 massive recession: Switzerland can easily absorb the shock

The Graduate Institute Geneva and are co-producing a series of «pocket lectures» about the current crises: Covid-19, the virus that changes the world.

Cédric Tille, Professor of Economics at the Graduate Institute Geneva and director of the program for bilateral assistance and capacity building for central banks (BCC), made the second episode of our series. His «pocket lecture» deals with the massive recession provoked by the measures required to save lives.

According to him, the pandemic could cost between CHF 36 and CHF 100 billion to the Swiss Confederation, depending on the stringency of restrictions and their duration. But Switzerland can easily absorb the shock, even under a very pessimistic scenario. The ratio of public debt to GDP would increase from 13% now to a range from 18 to 27%.

The Swiss debt ratio would then fall back to between 12% and 22% (depending on scenario and interest rates), values that remain very low in comparison with other European states.