Swiss government slashes growth outlook as Trump tariffs put 'heavy burden' on economy

Switzerland's authorities connected Thursday chopped its 2026 economical forecast for the country, citing the Trump administration's punitive tariffs arsenic a "heavy burden" connected its industries.

Officials held their forecast for the Swiss system to grow by 1.3% this year, but noted that this level of economical maturation was "significantly below-average" for the country. For adjacent year, they are present forecasting gross home merchandise (GDP) maturation volition dilatory to 0.9% – down from a erstwhile 2026 forecast of 1.2% growth.

"Higher U.S. tariffs person further clouded the outlook for the Swiss economy," officials said successful a quality merchandise connected Thursday.

Switzerland is an export-driven economy, and the U.S. was the apical overseas destination for its goods successful 2024. Back successful August, Switzerland was deed with 39% tariffs connected goods sent to the U.S. aft a Swiss delegation failed to unafraid a woody with U.S. officials — 1 of the highest country-specific rates imposed by the Trump administration.

The country's biggest exports see watches, pharmaceuticals and precious metals — but the state is besides renowned for its luxury goods, cocoa and skincare products. Branded and patented pharma products are newly taxable to 100% tariffs upon introduction to the U.S., unless their manufacturers person oregon are gathering accumulation facilities successful America.

Swiss officials said successful Thursday's update that nether existent commercialized conditions, planetary request for Swiss goods and services is expected to emergence "only modestly" successful the coming quarters.

"The existent commercialized argumentation situation presents peculiar challenges for Switzerland," they said. "The further tariffs are placing a dense load connected affected sectors and export-oriented companies, with important ripple effects expected crossed the broader economy. Moreover, persistent uncertainty is besides dampening economical activity."

The authorities besides warned that astir of America's different trading partners had been granted little tariff rates, placing Swiss exporters astatine a competitory disadvantage successful the U.S. market. White House commercialized argumentation held important power implicit the aboriginal trajectory of Switzerland's economy, they said.

"If Switzerland were to scope an statement with the U.S. oregon if planetary commercialized argumentation were to ease, a much favorable improvement would beryllium expected," they said. "Overall, however, downside risks presently dominate."

Beyond Trump's tariffs, request for the Swiss franc is besides adding to Switzerland's economical and diplomatic woes, with the currency – typically seen arsenic a harmless haven plus successful times of broader volatility – gaining much than 12% this twelvemonth amid lingering uncertainty. The rising franc has created headwinds for the country's cardinal slope by putting downward unit connected prices arsenic policymakers conflict to debar disinflation and antagonistic involvement rates.

U.S. dollar/Swiss franc

Officials said connected Thursday that the Swiss franc was continuing to play a relation successful Switzerland's economical challenges – and cautioned that a further strengthening of the franc was possible.

"A deterioration successful the planetary situation cannot beryllium ruled out," they said, noting that risks related to a marketplace correction, planetary sovereign indebtedness and the geopolitical scenery persisted.

"Should immoderate of these risks materialize, further upward unit connected the Swiss franc would beryllium expected," they said.

Charlotte de Montpellier, elder economist, France and Switzerland astatine ING, told CNBC connected Thursday that "risks for the Swiss system are mounting."

"Its vulnerability to the US marketplace is big, amounting to 4% of GDP," de Montpellier said successful an email. "I estimate a cumulative nonstop interaction of the existent summation of US tariffs to 39% connected Swiss GDP of astir 0.86% successful the archetypal 2 years."

De Montpellier precocious revised her ain maturation forecast for Switzerland for 2026 down to 0.8% – astir fractional the maturation complaint she was forecasting astatine the opening of this year.

"I judge that the hazard are tilted to the downside and the likelihood of having a 4th of antagonistic maturation has powerfully increased," she said. "The Swiss economy, agelong buoyed by pharmaceutical exports, present faces a play of heightened uncertainty that volition pb to a crisp deceleration of enactment momentum."

Melanie Debono, elder Europe economist astatine Pantheon Macroeconomics, said connected Thursday that the caller forecasts from the Swiss authorities were successful enactment with her own.

"A autumn successful goods exports, arsenic indicated by monthly nominal goods commercialized figures, coupled with falling concern — successful airy of the surge successful uncertainty and contempt [Swiss National Bank] complaint cuts, which volition yet provender done to little involvement rates faced by firms — means we expect the Swiss system to participate recession successful the 2nd fractional of this year," she told CNBC via email. "We deliberation Swiss GDP volition autumn by 0.2% quarter-to-quarter successful some Q3 and Q4."