* Swiss economy has strong Q2 upswing after restrictions lifted
* Sees re-emergence of Brexit, trade war risks
* Says COVID-19 remains by far the biggest risk
* Increasing number of cases not affecting consumer mood, economy (Rewrites, adding government comment, background)
ZURICH, Oct 12 (Reuters) - The Swiss government raised its 2020 economic forecast on Monday but remained cautious about a possible second wave of COVID-19 that could curtail growth if it triggered a nationwide lockdown.
Swiss output will shrink by 3.8% this year, a less severe coronavirus-triggered slump than the 6.2% drop previously expected, the State Secretariat for Economic Affairs (SECO) said.
Still, COVID-19 remains a serious concern for the government, which also highlighted the return of risks such as U.S.-Chinese trade tensions and a no-deal Brexit as threats to a post-pandemic upswing.
“Looking forward, we are only slightly more optimistic than before as risks remain very high,” SECO economist Ronald Indergand said.
Problems like Brexit and the trade conflict have been pushed into the background by the coronavirus, but are now re-emerging, he said.
“These are significant risks, but everything depends on the coronavirus, that is by far the biggest risk factor,” Indergand said.
“If there are small and local restrictions, the impact of a second wave will manageable. But if it is more than that, the economic impact would be considerable,” he said.
A recent increase in Swiss infection numbers has so far not worsened the consumer mood or reduced economic activity, Indergand said.
SECO expects strong growth in the third quarter as Switzerland recovers from restrictions that temporarily closed shops and restaurants to prevent the spread of the virus.
The recovery will continue next year, albeit at a slower rate, and the Swiss economy is not expected to hit pre-crisis levels until the latter part of 2021. For 2021, SECO said it expects the Swiss economy to grow by 3.8% when adjusted for income from sporting events, a slower recovery than the 4.9% level previously expected due to the less severe downturn foreseen for 2020. (Reporting by John Revill; editing by Riham Alkousaa, Louise Heavens, Larry King)