As the boost from the U.S. stockpiling of Swiss goods unraveled, Switzerland’s economy slowed significantly in the second quarter, increasing the probability that the Swiss National Bank will lower interest rates below zero later this year.
According to a flash estimate released Friday by the statistical agency SECO, the GDP grew 0.1% in the three months ending in June, compared to 0.8% in the first quarter.
Early in 2025, growth was driven by exports as American consumers hoarded Swiss goods, particularly medications. Following President Trump’s announcement of tariffs in April, that spike subsided and exports began to fall. SECO stated that services grew sufficiently to counteract an industry contraction, but it pledged to give more information in a comprehensive report on August 28.
Swiss economy slows as tariffs settle in
The Trump administration’s late-July declaration that it would impose a 39% tariff on most Swiss imports worsened the outlook. Switzerland was thus one of the few nations that had to pay a higher levy than was first suggested. According to Goldman Sachs, the action would reduce Switzerland’s GDP by 0.5% over the following 12 months. Swissmem, an industry association, called the possible consequences a “horror scenario” that might result in the loss of tens of thousands of jobs.
Whether the United States will impose the tariffs on pharmaceuticals, a vital sector of Switzerland’s export economy, is still up in the air. Major pharmaceutical companies Roche and Novartis, as well as high-end watchmakers and consumer goods behemoth Nestlé, are based in the nation.
Slow expansion incoming
“The economy is likely to expand only slowly the next couple of quarters as high U.S. tariffs and elevated business uncertainty weigh on exports and investment,” said Adrian Prettejohn, Europe economist at Capital Economics. He went on to say that the Swiss National Bank will probably lower its policy rate below zero later this year due to weak inflation. In 2015, the rate last fell below zero, and it stayed there until 2022.
In an effort to curb the franc, which has strengthened this year as investors have sought refuge amid international tensions, the central bank has already cut its main rate to zero. The impact of U.S. tariffs is exacerbated by a stronger franc, which reduces the competitiveness of Swiss exports.
Policymakers are under increasing pressure to safeguard Switzerland’s export-driven economy as a result of slowing exports, growth that is all but stalling, and impending tariffs. A rising franc and outside shocks have combined to give Switzerland one of its most difficult economic situations in recent memory.
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