Switzerland’s economy recovered slightly at the end of last year, partially offsetting the effects of hefty tariffs imposed by US President Donald Trump.
Quarterly GDP, adjusted for major sporting events, increased 0.2% in Q4 following a 0.5% decline in the previous quarter, falling just short of economists’ median forecast of 0.3% in a Bloomberg survey.
“Growth in the services sector was muted, while the industrial sector stagnated,” the State Secretariat for Economic Affairs said in a statement on Monday.
The data points to underlying resilience in the Swiss economy after the initial blow from Trump’s 39% tariff, which triggered the country’s sharpest contraction since the pandemic.
A subsequent agreement to reduce the tariffs to 15% from mid-November raised hopes that the trade measures’ impact would be limited. Following this, the government revised its growth forecast for the year close to pre-tariff levels, while still warning that uncertainty remains elevated.
Full-year growth reached 1.4%, in line with the government’s projection.
Businesses in Switzerland’s export-driven economy are facing challenges from a strong Franc, which recently hit new decade highs against both the Euro and the Dollar.
The currency’s strength could prompt the Swiss National Bank to contemplate reintroducing negative interest rates after already cutting its benchmark to zero.
Although Q3 saw only the second contraction since the pandemic, highlighting Switzerland’s relative economic resilience compared with many European peers, early indicators suggest that tougher conditions may lie ahead.
Layoffs are rising, especially in the crucial pharmaceutical sector, which has weighed on growth and is facing heightened pressure from the White House’s efforts to lower drug prices in the US.
Several small and medium-sized enterprises, accounting for roughly two-thirds of Switzerland’s workforce, have also announced job cuts or plans to relocate production overseas. Unemployment has been gradually increasing since 2023, though the seasonally adjusted figure saw a slight decline in January.
The GDP figures exclude the impact of major sporting events, as these can skew the overall view of Switzerland’s economic performance.
There are several major international sports organisations in Switzerland, so events like the Olympic Games, while generating revenue for bodies such as the International Olympic Committee, can inflate GDP figures without reflecting actual economic activity.
A final growth figure, along with more details on its underlying drivers, is scheduled for release on 27th February.