Swiss economy unexpectedly grows - avoids contraction before US tariffs hit
Switzerland's economy expanded unexpectedly in the second quarter of the year, before the country was hit by one of the highest U.S. tariffs ever. The 0.1% growth was better than the 0.1% contraction that economists had forecast in a Bloomberg survey. The previous quarter had seen growth of 0.8%, driven by exporters ramping up sales to the U.S. before the tariffs took effect.
The positive figures come at a difficult time for Switzerland, which has been facing a 39% tax imposed by US President Donald Trump, the highest level among developed countries. However, analysts remain optimistic that a recession can be avoided. US Treasury Secretary Scott Bessent has said that the US aims to conclude talks with the countries that have not reached an agreement by the end of October. Swiss officials see this as a positive signal to reach more favorable terms.
The State Secretariat for Economic Affairs noted that “the negative performance in the manufacturing industry has been balanced by gains from the services sector.” Another Bloomberg survey this week predicts economic growth of 1.4% this year, outperforming the euro zone, if a lower tariff is achieved and the pharmaceutical industry avoids heavy taxes.
The Swiss government is also optimistic, maintaining its June forecast for economic expansion in 2025, against a more negative scenario that predicts growth of just 0.8%. Some companies are considering the possibility of transferring part of their production outside Switzerland to avoid the new tariffs.
Meanwhile, the pharmaceutical sector, currently exempt from tariffs, remains a question mark after Trump warned of new measures for the industry. Pharmaceutical giants Roche Holding AG and Novartis AG held meetings with the Swiss government on Thursday to discuss the situation.
The data excludes the impact of major sporting events that can artificially inflate Switzerland's Gross Domestic Product (GDP). The country is home to several global sporting organizations. For example, when the Olympic Games are hosted, the revenue for the International Olympic Committee is included in GDP without representing real economic activity.
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