Q3: Swiss GDP falls amid global slowdown, tariff shock

Following the introduction of US tariffs of 39% on Swiss imports in August, Swiss GDP shrank by 0.5% in the third quarter compared with the previous quarter, according to the State Secretariat for Economic Affairs (SECO). Keystone-SDA

The Swiss economy has felt the full impact of the introduction of 39% US tariffs in August and the slowdown in the global economy. An initial estimate shows a contraction in gross domestic product (GDP) from July to the end of September.

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GDP shrank by 0.5% in the third quarter compared with the previous quarter, according to the State Secretariat for Economic Affairs (SECO), which published a seasonally adjusted estimate on Monday that is produced around 45 days after the end of a quarter.

In the second quarter, the country posted growth of just 0.1% compared with the previous quarter and excluding the impact of sporting events, following growth of 0.7% between January and March.

The Swiss economy therefore produced even less wealth than anticipated by economists consulted by the AWP news agency. They forecast growth of between -0.3% and 0.2% in the third quarter of 2025 compared with the previous quarter.

“Weighed down by a significant decline in value creation in the chemicals and pharmaceuticals sectors, industry as a whole has experienced a negative trend,” SECO economists said. Growth in the services sector was below average.

In October, SECO predicted GDP growth of 1.3% in 2025, compared with 1.2% in its previous estimate.

Export sectors relieved

Last Friday, Swiss Economy Minister Guy Parmelin presented the new trade agreement with the United States, which includes a tariff reduction on Swiss goods entering the US from 39% to 15%.

“It should be remembered that US customs duties are not being reduced from 39% to 15%, but rather from 0.6% (average imports in December 2024) to 15%, an important nuance that Swiss exporters will appreciate,” said John Plassard of Cité Gestion.

Under the new framework, Switzerland has undertaken to create value on the other side of the Atlantic. “In exchange for this gesture, Swiss and Liechtenstein groups have undertaken to invest $200 billion in the United States by 2028, including $67 billion from 2026, in industry, R&D and vocational training,” said Plassard. However, Bern cannot force its companies to spend their cash on the other side of the ocean.

Earlier this year, several Swiss multinationals announced spending in the US. Pharma giant Roche is to invest $50 billion (nearly CHF40 billion) in research and development across the Atlantic, while its counterpart Novartis opened a new production site in California in November. This is part of the $23 billion investment package in the US already announced by the company.

Plassard added: “For the watchmaking industry, which has been strangled since August by a 39% tariff that caused exports to the United States to plummet by more than 50% (in September), this is a breath of fresh air that avoids further short-time work and forced relocations,” However, America remains the leading destination for Swiss watches since the start of the year, worth CHF3.5 billion.

“The other export industries – machinery, electrical equipment and fine chemicals – are also seeing their margins improve, even if the combination of a strong franc and customs duties that are still higher than before April continues to erode their competitiveness”, stressed the expert.

For next year, SECO expects GDP growth of just 0.9%, according to its estimates published in October.

Translated from French by DeepL/sb

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