Swiss Economy Surges Far More Than Forecast, Led by Pharma
(Bloomberg) — Swiss growth momentum surged to the fastest pace since 2021, highlighting the economy’s resilience to higher energy costs and lingering trade uncertainty.
Gross domestic product adjusted for large sport events rose 1.5% in the second quarter from the previous three months, according to a flash estimate. That’s much higher than expected by any analyst in a Bloomberg survey, which predicted expansion would slow to 0.3% from 0.4% at the start of the year.
Pharmaceuticals and chemicals drove a good performance of the industrial sector, the State Secretariat for Economic Affairs said on Friday. The services sector including hospitality and finance also expanded, the agency added.
“It’s quite a surprise that growth would come in this strong,” said Maxime Botteron, an economist at UBS Group AG. “But I wouldn’t overstate the effects, this is more a one-time outlier than a sustainable acceleration.”
The reading provides new evidence of Switzerland’s ability to weather global turmoil after government spending was the main driver of growth early in the year. While the economic impact of the Iran war has become more pronounced, the country has been able to reap the profits of being less reliant on fossil fuels than peers.
Switzerland has also seen a rebound of manufacturing. In March, the purchasing managers index signaled growth for the first time in more than three years, and has continued to do so since.
Interventions by the central bank have helped exporters, as they prevent haven flows into the franc from causing the currency to appreciate. Policymakers have also held interest rates at zero and Bloomberg reporting indicates they currently expect no change in the benchmark through 2027 unless new shocks emerge.
At the same time, US trade policy remains a key uncertainty. Switzerland secured a preliminary agreement last November capping tariffs at 15%, but doubts linger on the reliablility of that limit, as Washington has so far failed to sign any legally binding deal. Talks continue and Switzerland’s top trade diplomat said in July there was a “good chance” of securing an outcome that makes the rate last.
Politically, Swiss voters removed a major risk to growth in June when they rejected a population cap proposed by the right-wing Swiss People’s Party. With immigration remaining a key fault line, the next plebiscite on economists’ radar is on relations with the European Union, which buys more than a third of Swiss exports. Voters are expected to cast ballots on new bilateral agreements next year or in 2028.
The preliminary GDP reading doesn’t include figures from all sectors of the economy, so it isn’t uncommon for it to be revised later. The final growth number, along with further details on its drivers, will be published on Sept. 3.
Friday’s reading excludes data from large sport events because they can distort the overall picture of the Swiss economy. The country is home to several global sports bodies, including the International Olympic Committee and the international soccer organization FIFA.
–With assistance from Kristian Siedenburg, Joel Rinneby and Harumi Ichikura.
(Updates with economist comment in fourth paragraph)
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