Customs dispute weighs on the Eastern Swiss economy: bleak forecasts!

Customs dispute weighs on the Eastern Swiss economy: bleak forecasts!

The Eastern Swiss economy is currently in a worrying state. According to the Eastern Swiss Economic Board, there are bleak prospects for the region, which are particularly negatively impacted by the USA's customs policy. The initial optimism at the beginning of the year, triggered by the German government's announced investment programs, has now been significantly dampened. Tagblatt reports that the machine industry is particularly troubled by reluctance to invest.

The entire Eastern Swiss export industry has been suffering from a low point for months, especially in its most important sales market, Germany. Companies in the metal, electronics and machinery sectors report a significant lack of orders. A survey by KOF and the Eastern Swiss Chamber of Commerce and Industry shows that many companies assess their business situation negatively. The US government's tariffs have contributed to a decline in business optimism. Before the tariff announcements, U.S. importers had been restocking, temporarily benefiting pharmaceuticals and other sectors.

Impact of tariff policy on industry

The USA's erratic customs policy is causing uncertainty worldwide and leading to delays in investment projects. At a time when the Swiss franc is rising in value—making exports more expensive—eastern Swiss industry has been particularly hard hit. It is currently difficult to make clear predictions about economic developments, as both negotiation successes and new tariff announcements could quickly change the situation. Apart from the arms industry, there are currently no signs of a turnaround in the economic situation.

Nevertheless, the domestic economy appears to be stable as long as the customs disputes do not have a negative impact on the labor market. Companies are currently trying to avoid layoffs by relying on short-time work. The federal government recently extended the maximum benefit period for short-time work from 12 to 18 months, which should be seen as a response to the worrying economic situation.

The role of the economic stimulus board

The Eastern Switzerland Economic Board assesses the development of the regional economy on a quarterly basis and relies on regular economic surveys in collaboration with the Economic Research Center (KOF) at ETH Zurich. Members of the board include Jan Riss, chief economist at the IHK St.Gallen-Appenzell, and Céline Koster, economic expert at the St.Galler Kantonalbank. This committee brings together various competencies to ensure a holistic and consistent assessment of the economic development in the region.

Overall, the situation in eastern Switzerland remains tense. The industry is struggling with a lack of orders and an uncertain future. The economic recovery seems a long way off, while the region's players are having to question their existing optimism.