Forecasts of a gloomy Swiss economic outlook in the year 2025
Switzerland's Economy Painting a Mixed Picture
The Swiss economy's growth projection for this year has taken a hit, with the ministry revising it down from 1.2% previously to 0.9%. TheEuropean economy, it seems, is crawling recovery-wise, as per the ministry's statement. They believe a normalization of international growth is an unlikely occurrence before 2026 due to the enormous uncertainty surrounding economic and trade policies.
On a brighter note, the ministry's group of experts anticipate a GDP growth of 1.7% in 2026. But the Swiss-German economic relationship remains rocky. The ministry points out that Germany, Switzerland's biggest European trading partner, is still grappling with weakness, particularly in its industrial sector. This, naturally, could hamper export-orientated Swiss industrial companies.
In Q3, Switzerland's economic growth slipped back to 0.2% from 0.4% in Q2. The slump was due to a drop in orders from Germany and the persistent challenge of the Swiss franc's strength. However, the ministry remains optimistic about consumption continuing to prop up the Swiss economy, thanks to a drop in mortgage rates and a steeper-than-expected decline in inflation.
Regarding inflation, the ministry revised its forecast down to 1.1% for 2024 from 1.2% previously, keeping the 2025 forecast at 0.3%.
According to recent projections, Switzerland's GDP growth in 2026 would range from a more pessimistic 1.0% to an optimistic 1.9% GDP growth, depending on the source. The Expert Group predicts a growth rate of about 1.6%, while the Federal Department of Economic Affairs (SECO) suggests a growth of around 1.0% for 2026. On the other hand, the KOF Swiss Economic Institute envisages a more optimistic growth rate of 1.9% attributable to anticipated fiscal stimulus in the EU and potential trade tensions challenges.
The Swiss economy's per capita GDP is also expected to rise, reaching approximately $108,930 in 2026, up from about $104,900 in 2025.
The complex interdependence with Germany in terms of bilateral trade suggests that escalation in trade tensions or a slowdown in Germany would have a detrimental effect on Switzerland's export sector and overall economic performance. In essence, while the 2026 GDP growth outlook lies within the range of about 1.0% to 1.9%, the Switzerland-Germany trade relationship remains a significant factor that can significantly affect the pace and stability of Swiss economic growth. The moderate growth outlook is a reflection of both internal uncertainties and external positive factors like fiscal stimulus in neighboring EU countries.
The Swiss economy's growth outlook for 2026, despite being quite varied, indicates a potential expansion, with the Expert Group predicting a growth rate of around 1.6%. However, the delicate business relationship with Germany, particularly in finance and industry, could significantly impact the pace and stability of Swiss economic growth, as escalating trade tensions or a slowdown in Germany might hamper export-oriented Swiss industrial companies.
