Uncertainty slows growth

The international conflicts in Ukraine and the Middle East are weighing on the global economy. High oil prices, rising transportation costs and the renewed emergence of supply bottlenecks are making many products and, albeit to a lesser extent, many services more expensive. For example, rolling out new AI services is becoming more expensive because hardware prices and energy costs are rising. As a result, inflation rates are rising again in many countries.

In the US and the EU, a scenario similar to that following Russia's invasion of Ukraine is emerging: back then, sharply rising energy prices caused inflation to rise by around 10 percent within a short space of time. An equally strong surge in inflation is not to be expected, as many countries have somewhat reduced their dependency on energy from the conflict zones. Nevertheless, the direction of price development is clear. The longer the problems with the passage through the Strait of Hormuz persist, the more inflation is likely to be fueled. Asia is particularly affected because countries such as India, the Philippines and Indonesia are highly dependent on energy from the conflict zone.

Weaker inflation trend in Switzerland

In an international comparison, Switzerland is still expected to see a significantly weaker inflation trend. The dampening effect of the strong franc on imported inflation, the fact that the Swiss economy has become significantly more energy-efficient over the last few decades and the already very high domestic price levels for energy and food mean that percentage price increases will be more moderate.

Additional uncertainty is being caused by the US customs policy as well as protectionist measures and subsidies in many countries. For export-oriented companies, it remains uncertain which framework conditions will apply tomorrow. However, the Swiss economy has learned to deal better with this uncertainty. At the same time, it is driving many companies to push ahead with their international diversification. This will weaken Switzerland as a business location in the medium term. The high level of regulation is also weighing on the attractiveness of the location.

Despite subdued consumer sentiment and rising energy prices, four factors are currently making the global economy surprisingly resilient. Firstly, many countries are providing additional demand with fiscal stimulus, for example through subsidies, higher government investment or tax cuts. Secondly, some of the additional government spending is flowing into extensive armaments programs. Thirdly, the big tech companies, but also many smaller companies, are investing substantial funds in data centers and AI applications. And fourthly, there is pent-up demand for replacement investments in individual sectors and stocks are being replenished to cushion future supply bottlenecks.

Export momentum mixed

The Swiss export industry remains under pressure, but is developing differently depending on the sector. The textile, watchmaking and food export industries are expecting exports to continue to decline. In the tech industry, on the other hand, there are signs of a bottoming out in the course of this year. High order intake indicates that MEM exports could increase again in 2027. The healthcare sectors - in particular the pharmaceutical and medical devices industries - continue to expect solid growth.

In the services sector, the situation in the Middle East is having a negative impact on tourism in particular, especially due to higher transportation costs. In contrast, banks, insurance companies and wholesalers are likely to increase their service exports compared to 2025 both this year and next year.

Stable development in the domestic economy

While the export growth engine is stuttering, the domestic economy is developing stably. The purchasing power of the population remains high overall. In addition, immigration will remain significantly higher than emigration in 2026 and 2027. Although the positive real wage trend will be dampened somewhat by rising inflation, the population's purchasing power will remain high and its demand - particularly for services - will continue to grow. Accordingly, the healthcare industry, as well as the telecommunications, IT, retail and transportation sectors, are expecting positive economic development this year and next. The real estate sector, consulting firms and the domestic banking and insurance business are also developing positively. In contrast, the situation in the media industry and the printing and publishing business remains structurally tense.

Private and public consumption remain an important pillar of growth and are expected to remain stable and grow by between 1 and 1.5 percent this year and next. Despite the great economic uncertainty, many companies are continuing to invest in Switzerland, particularly in equipment, but also in commercial construction. The construction sector is being driven primarily by rental and owner-occupied residential construction. The public sector is also continuously investing in building construction and civil engineering projects. Overall, construction is likely to grow by more than one percent this year and next year, while investments in equipment are expected to grow by around three percent.

GDP growth of 1.2 percent (2027) expected

Exports, on the other hand, are expected to decline slightly this year, followed by stagnation next year. Overall, economiesuisse expects Switzerland's real gross domestic product to grow by 1.0% in 2026 and 1.2% in 2027.

The phase in which more companies considered their headcount to be too high is gradually coming to an end. For 2027, roughly the same number of companies expect to increase their headcount as to reduce it. The labor market will therefore remain largely balanced and unemployment will only rise slightly. The unemployment rate is expected to be 3.1 percent this year and 3.2 percent next year.

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