Switzerland’s response to the Covid-19 pandemic has received good marks from the International Monetary Fund (IMF). However, he said that there is still work to be done beyond addressing the issues of pensions, the environment and relations with the European Union.
This content was published on April 7, 2021 – 15:47.
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According to the IMF’s forecast in the IMF’s annual report, economic growth in Switzerland is set to reach 3.5% this year and 2.8% in 2022.External reference, published Wednesday. Switzerland’s economy contracted 2.9% in 2020, less than other European countries.
“This reflected strong fiscal, financial and household reserves, highly competitive export industries (e.g. pharmaceuticals, chemicals), a large and well-capitalized financial sector, low dependence on high-intensity sectors (e.g. tourism), a well-resourced healthcare system, careful thoughtful containment measures (for example, refusal from widespread production closures) and ongoing adaptation, ”the IMF said.
The political response to the pandemic was “strong, fast and sustainable.” The authorities promptly took emergency measures in excess of 10% of GDP for households and businesses.
However, uncertainty remains high, largely due to the dynamics of the pandemic, he warned. How quickly vaccinations take place and how the third wave evolves is important.
The IMF delegation conducted this year’s country review from March 17 to April 7 via videoconference. The survey was not carried out last year due to the pandemic.
The IMF is a specialized agency of the United Nations (UN). The most important task of the IMF is to prevent financial crises and support crisis countries. To this end, he regularly examines the financial and economic policies of the member states and, if necessary, identifies risks.
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In any case, the IMF said the crisis is likely to have “cicatricial effects” – effects that will be noticeable long after the pandemic. This is especially true in sectors where demand may recover more slowly, such as hospitality or events. Although unemployment, debt and insolvency did not rise sharply, the situation could change if government support measures are lifted.
The IMF has recommended that labor market measures be retained until “a sustained recovery begins” to preserve jobs.
However, in her opinion, closer coordination between the government and the cantons “will increase the effectiveness, efficiency and timeliness of the intervention.”
EU, pensions and the environment
Moving on to other issues, the IMF noted that progress is needed in negotiations with the EU to ensure that Switzerland maintains its current access to the EU market.
Soon, the Swiss government is to announce its stance on the impasse in negotiations with the EU on an umbrella agreement for its more than 120 bilateral agreements.
The IMF also considers long-term provision of pensions important. “The Swiss pension system does not fit very well with demographic (aging, life expectancy) or economic trends,” it said. Without decisive reforms, significant funding gaps are projected by 2030, adding that far-reaching reforms are needed, including larger increases in the retirement age.
Switzerland also needs a clear and verifiable plan for the implementation of its climate strategy. The IMF said other advanced economies are launching Green New Deals to meet their climate targets. While Switzerland is making and planning environmentally friendly investments in public transport, roads and railways, “further targeted measures should be considered”.