Swiss trim 2025 growth forecast on economic uncertainty

ZURICH: Switzerland’s finance ministry trimmed its 2025 and 2026 growth forecasts on Tuesday, citing a global climate of “considerable uncertainty”.

The ministry revised its 2025 projection -- which it had already trimmed by 0.1 percentage points in December -- from 1.5 per cent to 1.4 per cent. It likewise lowered expectations for 2026 by 0.1 percentage points to 1.6 per cent growth.

“This would mean the Swiss economy would continue to grow below its historical average for another two years,” the ministry said on its website. “The uncertainty surrounding international economic and trade policy and their macroeconomic consequences remains exceptionally high.

“The current forecast assumes that there will be no escalating global trade war, despite US President Donald Trump repeatedly threatening and applying punishing new tariffs on allies and trading partners, provoking retaliatory levies.”

The ministry admitted that “more extreme scenarios remain possible”. The ministry’s group of experts expects the US economy to “lose momentum” in the first quarter while European economies have made a “modest start to the year”.

The ministry has thus prepared two possible scenarios -- one negative that “would significantly impact Swiss exports and domestic economic activity” and a positive one in which “demand for Swiss exports would strengthen and Switzerland would experience higher economic growth”.

However, it concluded that “overall, downside risks to the economy currently outweigh upside potential”. The ministry did not change its 2025 inflation expectations of 0.3 per cent but slightly lowered its projections for 2026 from 0.7 to 0.6 per cent.