Switzerland is getting ready to reopen, part of an advance guard of countries embarking on Europe’s biggest experiment in public health.
After almost a month in confinement, the Swiss public learned Wednesday that the government will start relaxing its coronavirus restrictions at the end of April. Austria, Norway, and Denmark are also planning to ease their antivirus measures this month.
Having succeeded in suppressing the epidemic, the Federal Council is now trying to figure out how to reboot the economy while keeping the virus under control. Switzerland’s reliance on exports will be a major challenge, making a recovery dependent on how quickly major trade partners like Germany, the U.S., and China get back to work.
“We can do a lot on our own and the government is doing a superb job, but this is not only us, it’s the entire world,” said Markus Will, a senior economist at the University of St. Gallen. Europe needs a region-wide approach to the recovery, and Switzerland needs to be part of it, he said in an interview with CNNMoney’s Olivia Chang.
Switzerland’s post-lockdown plan, still a work in progress, remains under wraps until April 16. But the council has said the unwinding of restrictions will be gradual, with public health remaining the priority.
Countries emerging from confinement in Europe are taking different approaches. Norway is starting with schools and limited travel, while Austria is opening small shops, hardware stores, and nurseries. Germany is sticking to its lockdown for now, while Italy is mulling a move toward more personal freedom as early as this month.
“I would start with the production lines,” Will said. “We need to get the industry back running.”
Shops should be next to open, followed much later by restaurants and tourist activities, he said. Social distancing rules will mostly likely remain in place for the foreseeable future, slowing the economic recovery.
Pressure is building on governments to explain their plans because of the mounting economic costs of closing businesses and borders and curtailing public life. Economics Minister Guy Parmelin says the Swiss economy has taken an enormous hit with production collapsing about 25 percent.
The government is forecasting a recession this year. In the worst case, Swiss output could shrink by as much as 10.4 percent, according to the State Secretariat for Economic Affairs. If much of the economy remains on hold through June or July, the damage could easily add up to more than 10 percent, Will said.
Switzerland’s low ratio of debt to gross domestic product puts it in a better position to weather the crisis than many countries, because the government can afford to boost spending to stimulate the economy. The council has already launched a CHF 62 billion aid package, consisting mostly of guarantees on bank loans for small businesses and support for companies that keep workers on the payroll.
It may not be enough.
Switzerland will need months if not years to return to the economic level before the pandemic began, Will said. Much depends on how quickly the rest of the world rebounds.