Uncertainty is slowing down the Swiss economy: Alarming trends!

Uncertainty is slowing down the Swiss economy: Alarming trends!

The current economic situation is characterized by great uncertainty, which is further exacerbated by geopolitical tensions and questionable requirements of international trade. The USA's customs policy in particular is causing uncertainty on the world markets and is particularly affecting small and medium-sized companies (SMEs). This situation is accompanied by new trade conflicts, such as the one between the USA and China, as well as the ongoing conflicts in Ukraine and the Middle East, such as economiesuisse reported.

The uncertainties surrounding future access conditions to the US market increase the difficulties for exporters. In response to the aggressive tariff policy of the USA, China and the EU are also taking countermeasures, which is leading to fragile international supply chains. Swiss companies report falling orders, particularly in the machinery and watch industries, and a general weakness in demand is evident in all major regions of the world.

Impact of geopolitical risks on trade

A study at the Bundesbank sheds light on further aspects of geopolitical risks and their influence on trade. It shows that price-adjusted imports from countries with increasing geopolitical risk decrease, while at the same time import prices increase. This development corresponds to a negative supply shock for the affected economies, which is also reflected in the reported business situations. This finding highlights the direct impact of such risks on international trade, which can be observed not only in Switzerland but globally, as the study by Khalil, Osten and Strobel (2025) states. This analysis also takes into account the influence of domestic demand developments and is situated in the context of the general uncertainty on the markets.

Switzerland is particularly experiencing a decline in foreign trade in goods, while a survey shows that the customs problem and the associated uncertainty are identified by around 50% of companies as the biggest economic risks. Experts warn that the decline in demand, together with the high level of uncertainty, could further aggravate the economic situation.

Impact on various industries

Swiss companies from the machinery and watch industries are expecting a decline in sales. In other sectors, such as textiles, chemicals and food, there are mixed prospects. While the service markets remain stable, investments in equipment could now increase again after a weak previous year. The construction industry is also showing the first signs of improvement after a weak start to the year. Nevertheless, domestic economic support through private consumption remains important as real wages rise, which in part strengthens consumers' purchasing power.

Overall, a moderate increase in the unemployment rate to around 3.0% is expected, while the number of people on short-time work is increasing. Many companies also face risks from rising prices and increasing regulation. Despite all these challenges, economiesuisse forecasts slight GDP growth of 1.1% for 2025.

In summary, it can be said that the world trade situation in 2025 is strongly characterized by uncertainties and geopolitical tensions, which have a direct impact on Switzerland's economy and its international relations. This complex situation will demand a lot from companies and political decision-makers in the coming months.