Switzerland’s Economy Sees Modest 0.1% Growth in Q2 2025
Switzerland’s economy expanded by 0.1% in the second quarter of 2025, slowing sharply from the 0.8% growth recorded in Q1. However, the result beat market expectations for a contraction.
The GDP figure, adjusted for sporting events, was slightly below Capital Economics’ forecast of 0.2% growth, but above the consensus estimate of a 0.1% decline.
According to the official release, services sector growth helped offset declines in industrial production. The slowdown hit the pharmaceutical industry hardest, following a first-quarter export rush to the United States ahead of new tariffs.
Consumer spending also weakened. Retail sales dropped 0.4% compared to the previous three months.
The Swiss economy continues to face pressure from U.S. tariffs, which currently stand at 39%, excluding gold and pharmaceuticals. If these tariffs remain in place, economists warn they could cut Swiss GDP by 0.6% in the medium term.
If the pharmaceutical exemption is removed, the potential impact could rise to 1–2%, possibly triggering a short-lived recession.
Trade talks with the U.S. have made little progress in recent weeks. Swiss negotiators have even floated unconventional offers, such as relocating FIFA headquarters to the U.S. or placing a special tax on gold exports to America. While these measures would have minimal economic impact, it is unclear whether they would address U.S. concerns over the trade gap.
With inflation near zero, Capital Economics expects the Swiss National Bank to cut its policy rate by 25 basis points to -0.25% in 2025, most likely at its September meeting.
