Swiss Outlook Cut at UBS With Warning on Trump’s Pharma Push

(Bloomberg) — UBS Group AG cut its forecast for expansion in Switzerland this year and warned that Donald Trump’s pressure on drugmakers poses a long-term threat to one of its biggest drivers of growth. 

Economists Alessandro Bee and Florian Gemanier now expect gross domestic product adjusted for large sport events to grow by 1% in 2025, down from a prior outlook of 1.5%, as the US president’s attempt to rewire global trade hits a country still dependent on exports for its prosperity.

Trump’s onslaught on commerce might pose a longer-term risk to economic growth by driving pharmaceutical investment away from Switzerland and into the US, the analysts warned. The country is home to a thriving drugs industry centered on Basel-based giants Novartis AG and Roche Holding AG.

“From a protectionism standpoint, that’s almost the biggest threat to the Swiss economy over the long term,” economist Alessandro Bee told journalists on a call on Tuesday. “The crucial question will be, how much of their research actually shifts to the US? This isn’t yet a very pronounced trend in the pharma industry, but it’s likely to be reinforced by tariffs.”

In line with a majority of forecasters, the analysts reckon the Swiss National Bank will cut its interest rate to zero in June as officials try to dissuade flows into the franc and sustain price increases. With inflation seen likely to average just 0.2% this year, they can’t exclude either market intervention or a further reduction into negative territory.

Consumption may benefit from real-wage increases amid low inflation, but any improvement in trade and investment is unlikely before 2026, the economists predict.

“The Swiss economy has been driven primarily by domestic demand, with foreign trade unable to contribute to growth,” they wrote in their report. “This situation is unlikely to change much this year and at the start of next year.”

–With assistance from Bastian Benrath-Wright.

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