Coronavirus pushes Swiss economic indicator to record low

ZURICH, May 29 (Reuters) - Switzerland is in a sharp recession, the KOF Economic Institute said on Friday, as the coronavirus crisis brought many businesses to a halt, plunging KOF’s forward-looking economic barometer to its lowest-ever level.

The indicator fell 6.5 points to 53.2 points in May from a downwardly revised 59.7 points in April.

A reading of 100 is the long-term average level of output in the measure, which points to the health of the economy in about six months time.

May’s reading was the lowest since the barometer began in the 1970s, with the decline over the last three months steeper than during the global economic recession of 2008/9, KOF said.

The manufacturing sector continues to suffer the most, KOF added, while indicators relating to foreign demand also have a clearly negative impact.

Although Switzerland has announced the gradual relaxation of measures to combat the spread of the coronavirus, the impact of the shutdown, lower demand and job losses will be difficult to avoid.

“It would be great if the economy would function as before, but we are far, far away from normalisation in Switzerland,” KOF economist Jan-Egbert Sturm told newspaper Tages-Anzeiger.

“Domestic consumer sentiment must first really recover, and then Switzerland, as an exporting country, will have the problem above all that the international economy is still a long way from returning to the way it was before the crisis.”

The government has forecast the biggest economic downturn in Switzerland since 1975, expecting output to fall 6.7% in 2020 before a partial recovery next year.

So far 15 billion Swiss francs ($15.58 billion) in emergency loan credits have been handed out to keep 125,000 Swiss companies afloat, while 1.9 million workers - around 37% of the workforce - have applied for short-time working compensation.

The government will publish first-quarter GDP data on June 3. ($1 = 0.9627 Swiss francs) (Reporting by John Revill; Editing by Michael Shields)