Swiss Outlook for 2026 Is Cut by UBS Amid Concern on Tariff Hit
(Bloomberg) — UBS Group AG cut its growth forecast for Switzerland next year and predicted a sustained impact on the economy as long as US President Donald Trump’s 39% tariff remains in force.
Analysts Alessandro Bee, Florian Germanier and Maxime Botteron now expect gross domestic product adjusted for large sport events to rise by 0.9% in 2026, down from a prior outlook of 1.2%, according to a report published Friday.
Failure by the Swiss to reach a deal with the US will shave as much as 0.4 percentage point off growth in the next year, they added. The slowdown could be accentuated by higher unemployment and weaker wage growth, the economists said.
“In the coming quarters, consumption is likely to remain the mainstay of the economy,” Bee and his colleagues wrote. “However the risks have increased noticeably, especially with regard to next year.”
The outlook chimes with comments this week by Swiss government agency SECO, in a report confirming that the economy sustained expansion in the first half of the year. Services more than offset a contraction in manufacturing, fueling a better-than-expected overall outcome.
Given that backdrop, the UBS economists raised their forecast for this year, anticipating growth of 1.3%, up from a previous estimate of 1%.
Swiss officials were taken by surprise by what amounts to the steepest US tariff on a developed nation and are now pushing to secure a lower rate. US Treasury Secretary Scott Bessent has said Washington aims to largely wrap up talks with countries that haven’t secured a trade deal by the end of October.
Analysts reckon Switzerland can still avoid a recession, and the government plans to boost domestic business by cutting red tape. But if Trump’s trade measures extend to include the key pharmaceuticals sector however, a downturn can no longer be ruled out, Zurich’s KOF research institute has warned.
In any case, Trump’s objective of luring major drug companies’ output to the US may inevitably hurt Switzerland’s export-dependent economy, according to UBS.
“In the medium term, the Swiss pharmaceutical industry is likely to create sufficient production capacity in the US to supply the American market and thus avoid high tariffs,” the economists wrote. “This is likely to cause Switzerland’s trade surplus to melt away and growth to suffer in the medium term.”
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