Experts expect moderate growth in the Swiss economy in 2025
Published: Tuesday, Dec 17th 2024, 12:00
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The Swiss economy is set for a moderate recovery. This is the conclusion reached by both KOF economists and Seco experts. However, the uncertainty surrounding global economic development remains high.
Economic researchers at ETH Zurich (KOF) and federal economists agree that the persistently weak outlook for Europe, and in particular the difficult situation in Germany and France, is putting the brakes on domestic exports. In addition, there are numerous geopolitical risks such as the war in Ukraine, the situation in the Middle East and China's threatening gestures against Taiwan. And last but not least, Donald Trump is another uncertainty factor hovering over the forecasts.
Moderate upturn in 2025
Growth in real gross domestic product (GDP, adjusted for sporting events) is likely to be very modest in 2024. Both the State Secretariat for Economic Affairs (Seco) and the KOF are forecasting growth of 0.9% for this year. In their press release on Tuesday, they both rowed back a little, as Seco had previously forecast GDP growth of 1.2% and KOF 1.1%. These figures refer to estimates adjusted for major sporting events.
Things should then look better again in 2025, albeit somewhat weaker than initially hoped. Seco experts still expect GDP growth of 1.5%, while the KOF believes 1.4% is possible. While the export economy is being held back by the strong franc and the weakness of its European neighbors, at least domestic consumption is supporting the domestic economy, they agree.
Meanwhile, the KOF identifies the pharmaceutical industry as one of Switzerland's growth drivers. Overall, the Seco experts see the sector structure and broad diversification as stabilizing factors for the domestic economy.
Accordingly, economists expect the Swiss economy to continue to recover in 2026, with GDP growth (adjusted for sport) of 1.7%. According to Seco, construction activity is also likely to provide support thanks to lower interest rates. The KOF also agrees with this. It also expects the SNB to cut interest rates again in March to 0.25 percent.
Inflation to fall sharply
In terms of price trends, economists expect inflation to be significantly lower in 2025 than in the current year. Inflation is expected to fall from 1.1% in 2024 to 0.3% (Seco) and 0.5% (KOF). According to the forecasts (Seco: 0.7%, KOF: 0.6%), the SNB's target range, which envisages inflation of between 0% and 2%, will probably not be put to the test in 2026 either.
There is consensus among economists with regard to the development of unemployment. The institutes agree that it will rise.
Seco is forecasting a rate of 2.7% for 2025 and 2026. The KOF even expects the unemployment rate to rise to just under 3% by 2026.
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