Based on Switzerland’s economic performance in the second quarter of 2025, there was 0.1% GDP growth, which is seen as a slowdown from the first quarter. The first quarter was driven by pharmaceutical exports, while Q2 was impacted by weak industrial performance due to the effect of US tariffs. According to Debon, in August 2025, the US imposed a 39% tariff on most Swiss goods (35–40% of Swiss goods exported to the US), excluding pharmaceuticals.
According to Goldman Sachs economists, the Swiss National Bank expected to cut its policy rate by 25 basis points in September given the conditions of weak growth, low inflation, and ongoing tariff risks.
Swiss President Karin Keller-Sutter was criticized for handling negotiations with the US regarding tariffs, as the tariffs were announced by the US side during last-minute talks.
By the end of 2026, there will be a loss of 0.3% of GDP due to tariffs on the Swiss economy, according to BNP Paribas, leading to a short, shallow recession in the second half of 2025.
There is a policy challenge of stimulating Swiss growth through cutting the bank rate, which makes borrowing cheaper for both banks and consumers, stimulates the economy, and also increases inflation due to higher demand for goods and services. However, a strong Swiss franc makes exports expensive abroad, reducing demand for Swiss goods overseas and offsetting domestic spending power. More exports mean more incoming revenue, which activates domestic spending, and vice versa. Under this context, the SNB has to balance bank rate cuts with currency strength; otherwise, the growth boost may be weakened.
News Reported by: Saurav Raj Pant
