IMF highlights positive Swiss economic outlook

The IMF highlights the strength of the Swiss economy Keystone-SDA

Faced with US tariffs, sluggish global growth and geopolitical tensions, the Swiss economy is holding up well and is expected to continue to do so, according to the International Monetary Fund (IMF).

Domestic demand, zero interest rate and recent wage rises are expected to keep Swiss growth and inflation at reasonable levels. Gross domestic product (GDP) growth is therefore forecast at 0.8% for 2026 and 1.5% for 2027, excluding sporting events. Unadjusted growth excluding these events is forecast at 1.1% and 1.2% respectively, according to the IMF’s economic outlook published on Thursday.

Inflation is expected to rise to +0.6% this year – after reaching +0.2% in 2025 – and then return to +0.6% next year. The strong franc will continue to weigh on imported inflation, warn IMF experts.

The IMF also forecasts a deterioration in the labour market in 2026, with the year-on-year unemployment rate estimated at 3.1% (+0.3 percentage points compared with 2025), before a slight improvement next year to 3.0%, the statement said.

Pessimistic scenario

Overall, geopolitical and trade tensions, as well as rising energy prices, will weigh on Swiss GDP and exports. The Swiss growth model could even be jeopardised in the long term, warns the IMF, due to the “fragmentation” of trade disrupting supply chains.

This pessimistic scenario, involving weaker external demand and high energy prices, could reduce growth to 0.3% over the period 2026–2027, whilst inflation remaining within the 0–2 per cent range set by the Swiss National Bank (SNB). Furthermore, the IMF does not rule out a “stagflationary” shock, with GDP growing by 0.6% but accompanied by much higher inflation.

These risks do not diminish Switzerland’s room for manoeuvre; the country could respond through an even more accommodative monetary policy or via fiscal measures, according to the report’s authors. They also view the SNB’s recent decisions in a positive light.

Including the financial sector in its assessment, the IMF welcomes the government’s commitment to tightening the rules for banks posing a systemic risk – UBS in particular – as well as to establishing a public liquidity support mechanism. Once these measures have been implemented, the country’s financial stability will be strengthened, the press release notes.

Translated from German, sub-edited by jdp