Stimulus packages are staging an international comeback in the wake of coronavirus. In Switzerland too, the first calls for fiscal measures could be heard only shortly after the outbreak of the pandemic. But with numerous indicators suggesting that Switzerland will not slide into a prolonged recession, it makes little sense to stimulate overall economic demand.
In the past we’ve seen that the benefits of stimulus packages have often been extremely limited. Efforts to stimulate private consumption usually fail because in times of crisis households save additional income rather than spend it. And the trouble with government spending − for example in the form of investment programs − as a way of getting the economy going is that suitable projects are often in short supply, and in most cases the effects only set in once the economy has recovered.
Currently there are no compelling reasons to put together stimulus packages over and above the immediate Covid-19 assistance available in Switzerland. Instead there should continue to be systematic support for all measures designed to directly tackle the pandemic − for example spending on testing and tracing, and the approval of vaccines.