Tariffs dampen Swiss economic growth prospects

Swiss economy likely to grow much slower than expected in 2026 Keystone-SDA

The Swiss economy is likely to grow much more slowly in the coming year than was assumed in the summer, according to experts from the KOF Swiss Economic Institute at ETH Zurich.

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The US tariff hammer of early August and the various uncertainties are to blame.

According to KOF, gross domestic product (GDP) is only expected to grow by 0.9% in 2026 without international sporting events. In the summer, it had still expected 1.5%. KOF confirmed its forecast of 1.4% growth for 2025 and 1.6% for 2027.

According to KOF, the import tariffs introduced by Washington are having an increasingly negative impact on the Swiss export sector. The fact that Swiss goods are subject to higher duties on average than products from the EU is particularly critical.

Although the pharmaceutical industry has supported the economy so far, an obligation to reduce prices could weaken the positive effect, KOF wrote. There is an even greater risk if US tariffs are also introduced for medicines in the future. In their forecast, the researchers assumed that medicines would remain duty-free, but that the pharmaceutical industry would have to reduce its prices in the US by 10%.

The labour market is also cooling noticeably. For 2025, the KOF is forecasting job growth of just 0.3%, the lowest since the pandemic. Employment growth is also likely to remain below average at 0.5% in 2026, while the unemployment rate is expected to rise to 3.2% by then.

Wage growth will be subdued, it added. However, due to low inflation, real wages are expected to increase slightly. Overall, KOF described the forecast uncertainty as high.

Translated from German by DeepL/mga

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