BAK Economics slightly reduces GDP forecast for 2025
Published: Thursday, Dec 5th 2024, 12:40
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The economic researchers at BAK Economics have become even more cautious with regard to the Swiss economy in the coming year. Following the reduction in the GDP forecast at the end of September, BAK has once again lowered its forecast by 0.1 percentage points. For the first time, there is also a forecast for 2026.
Specifically, the institute expects gross domestic product (GDP) to grow by 1.4% in the coming year, compared to 0.9% in the current year, as it announced on Thursday. The 2025 forecast from September was still at 1.5 percent. In 2026, growth is expected to accelerate only slightly to 1.5 percent. These figures are adjusted for major sporting events such as the FIFA World Cup, European Championships or the Olympic Games.
The global economy remains below its potential and the geopolitical risks are numerous, BAK Economics explains its more cautious stance, while also pointing to "unusually high forecast risks". The return of Donald Trump as President of the USA threatens massive distortions in global trade and the wars in Ukraine and the Middle East could have a price-driving effect on the commodity markets. The tense political situation in Germany and France adds to this.
Swiss franc likely to remain strong
However, Switzerland has solid stabilizers that should support growth, says the BAK, dampening excessive pessimism. Interest rates in Switzerland are therefore likely to fall further, while the franc will remain strong. In addition, the economists expect inflation to remain at a low level, allowing real wages to rise, and immigration to remain high.
The BAK forecast for inflation in 2025 and 2026 is 0.4% in both years. By contrast, the unemployment rate is likely to rise from 2.4 percent in the current year to 2.8 percent in 2025 and even to 2.9 percent in 2026 due to the continuing weakness in industry.
The economic researchers also expect the Swiss National Bank to cut interest rates by a further quarter of a percentage point in December and March 2025.
©Keystone/SDA
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