ZURICH, June 30 (Reuters) - The outlook for the Swiss economy improved slightly in June, the forward-looking KOF Economic Barometer showed on Tuesday, although sentiment remains marred by the COVID-19 pandemic.
The indicator, produced by economists at the Federal Institute of Technology (ETH) in Zurich, rose 9.8 points in June to 59.4 points, the first increase since February but still far below the long-term average of 100 points.
The downward trend in individual sectors of the economy has halted, KOF said, adding that sentiment in the industrial sector, services and construction was starting to improve, albeit from low levels.
“The uptick could have been foreseen because the lockdown is largely over, businesses are starting again, restaurants are serving again,” said KOF economist Michael Graff.
“The situation has gone from dramatically bad to slightly less dramatically bad, but is still very serious.”
Switzerland’s economy has started to regain traction after the government relaxed most of the restrictions surrounding the novel coronavirus, including reopening borders.
The government has raised its forecast for the country’s economy, expecting a downturn of 6.2% this year.
Switzerland’s strong pharmaceutical sector is helping stabilise the economy, and the country is further along in reopening than many others, said Karsten Junius, an economist at J. Safra Sarasin.
But fears remain that a second wave of coronavirus could force a stiffening of restrictions. Three hundred people went into quarantine after a visitor to one Zurich nightclub infected at least five other people with the coronavirus over the weekend.
“Maybe a second wave would not be so bad for the economy because the restrictions may not need to be so broad because the authorities will have learnt lessons,” Graff said. “But many businesses are already weakened by the first wave, and a second wave of restrictions could finish some of them off.” (Reporting by John Revill, Editing by Timothy Heritage)
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