The economy Economiesuisse expects economic growth to remain subdued

There is no acceleration in sight for the Swiss economy. In view of weak demand and the threat of trade disputes, Economiesuisse expects only modest growth in the Swiss economy.

The global economic situation will not improve significantly next year either, explained the umbrella organization of the Swiss economy: Economiesuisse predicts real gross domestic product (GDP) growth of 1.4 percent for 2025, according to a press release issued on Wednesday.

This means that the Swiss economy will remain slightly below its potential in 2025. Meanwhile, Economiesuisse has confirmed its previous forecast of 1.1 percent GDP growth for the year 2024. GDP growth was weak in the first three quarters, as figures from the State Secretariat for Economic Affairs (Seco) showed last week.

Trade barriers fuel inflation

According to Economiesuisse, global markets are continuing to fragment into trading blocs and individual markets that are closing themselves off from each other. This will not change with the new US President Donald Trump taking office. Rather, further trade barriers would probably be erected, which would be accompanied by countermeasures from other countries.

The association also warns of the negative consequences of a trade war through reciprocal tariff increases. These would make imported goods more expensive, which would fuel the inflation rate again.

Swiss exports are losing momentum

An open economy like Switzerland is particularly affected by such developments. "The geopolitical tensions are weighing on global economic growth and therefore on the Swiss export economy," the association continued. Demand is already weak, especially in Europe. Economiesuisse estimates that export growth is likely to fall from 1.7 percent this year to just 1.0 percent in 2025.

Overall, however, the Swiss export industry is holding its own even in a difficult international environment thanks to its focus on highly specialized niche products and innovative specialties. The broad diversification with a good mix of industries and a global orientation helps in uncertain times.

"If demand is weak in the European automotive industry, for example, this is problematic for Switzerland, but does not threaten its existence because other markets at least partially compensate for this," explained Economiesuisse.

Solid domestic economy

The Swiss domestic economy, on the other hand, is growing solidly. It can rely on stable consumer demand. Private households are benefiting from real wage increases and low unemployment. Private consumption is likely to increase by 1.6 percent next year. Government consumption is also strong. Companies, where the uncertain market development is dampening investment, are much more cautious. However, investment in equipment should increase significantly again in 2025 after having shrunk in the past two years.

According to the association, many sectors that are mainly domestically oriented will continue to develop positively in 2025 after a good 2024: construction and in particular the finishing trade, wholesale, retail, healthcare, consulting and IT & telecoms are likely to grow overall. It will be more difficult for the printing and publishing industry.

Inflation is falling faster than expected

Inflation is also low. The umbrella organization expects inflation to fall from 1.3 percent this year to an average of 0.8 percent next year. This means that inflation has fallen faster than expected, explained Economiesuisse.

The Swiss labour market is currently normalizing somewhat. The number of job vacancies is decreasing and the labor shortage is slightly reduced. "However, the employment outlook remains good overall, as more companies want to expand their workforce than reduce it," it said. Economiesuisse expects the unemployment rate to rise only slightly from 2.4 percent this year to 2.6 percent next year.

SDA