The Swiss economy is off to a strong start to the year – what follows after Trump?

The Swiss economy is off to a strong start to the year – what follows after Trump?

The Swiss economy made encouraging progress in the first quarter of 2025, achieving growth of 0.7 percent compared to the previous quarter. These figures come from an initial estimate by the State Secretariat for Economic Affairs (Seco) and exceed the previous expectations of economists, who expected an increase of only 0.2 to 0.5 percent. The service sector in particular contributed to this above-average growth, while industry also grew. The development in the pharmaceutical industry is particularly positive, while the machinery industry is faced with challenges.

Felicitas Kemeny from Seco points out that various indicators, including foreign trade figures, signaled positive signs for the start of the year. Exports showed a noticeable increase in March, indicating a premature boom. However, there are concerns about the sustainability of this growth. The uncertainty comes particularly from US President Donald Trump's tariff threats, which could threaten economic stability. Trump's policy change, known as “Liberation Day,” took place at the beginning of the second quarter and has the potential to permanently change international trade.

Cautious outlook

Despite the dynamic start to the year, Kemeny warned that the obvious growth figures from the first quarter should not obscure the possible slowing effects. Many economists expect below-average growth of around 1 percent for the entire year 2025. Over a longer period of time, average growth in Switzerland is between 1.5 and 2.0 percent.

One reason for this caution is the assessment of the impact of Trump's tariff policy. After an initial analysis, the president announced a punitive tariff of 31 percent on Switzerland, which was initially suspended for 90 days. This led to a decline in economic activity from mid-April 2023. The announcement had particularly negative consequences for foreign trade, which was reflected in a significant decline in exports.

Market situation and company feedback

In a recent survey, UBS found that many Swiss companies are increasingly concerned about potentially tightening commercial law measures. The uncertainty caused by Trump's policies could lead to a slowdown in the global economy. Companies are therefore concerned about the extent to which they can continue to compete internationally and what the impact of developments leading up to the American tariff deadline will be.

According to economists at UBS, real GDP growth of 1 percent is forecast for 2025. The domestic economy remains stable, supported by private consumption and high levels of immigration. However, GDP per capita is expected to stagnate or decline slightly as economic output increased only slightly in 2023 and 2024.

Overall, Switzerland's economic situation remains complex. The development depends crucially on the negotiations between Swiss politicians and the Trump administration. The official growth figures will be published on June 2, 2025, and it remains to be seen how the situation will develop by then.

For more information you can read the reports from SRF and NZZ read.