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Swiss Economy Could Shrink 10.4% This Year On Covid-19: Govt

Switzerland's economy could see a double-digit contraction this year due to the containment measures adopted to slow the spread of the coronavirus, or Covid-19, pandemic, the government said Wednesday.

An extended lockdown in the country's main trading partners such as Germany could lead to GDP shrinkage of as much as 10.4 percent this year, under a negative scenario, the government said.

There will be an "L-shaped" recovery under this scenario due to second round effects such as bankruptcies and loan defaults, and the economy log a modest 3.4 percent growth in 2021.

In March, the government agency SECO had forecast 1.5 percent contraction this year and 3.3 percent growth next year.

In the worst-case scenario, the unemployment rate is seen at 4.5 percent this year and then rise sharply to 6 percent next year.

In a "V-shaped" scenario, the shutdown ends by the end of May in Germany. Under this, GDP is forecast to fall 7.1 percent this year and recovery strongly by 8.3 percent next year.

The government also decided to extend the lockdown by a week to April 26 and said it will start to ease the shutdown gradually before the end of the month.

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