BAK predicts growth of only 0.9% in 2026
Keystone-SDA
Economic research institute BAK Economics continues to forecast only modest growth of 0.9% for Switzerland in the coming year.
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Persistent uncertainty and a weak global investment cycle are likely to dampen the export and capital goods industry, the Basel-based institute indicated on Tuesday.
In concrete terms, as already forecasted in August, the market research institute expects Swiss gross domestic product (GDP) to grow by 0.9% in 2026, excluding sporting events. After an already moderate increase of 1.4% in 2025, Switzerland would experience a further marked slowdown.
The recent declaration of intent in the area of tariffs communicated by the governments of Switzerland and the United States is certainly a welcome relief and in particular reduces the competitive disadvantages of Swiss exporting companies compared to those of comparable foreign countries, says a statement issued today. However, this agreement had already been anticipated in earlier forecasts: without it, the outlook for 2026 would be lower – up to 0.3 percentage points less growth.
US remains unpredictable
Despite the expected reduction, tariffs at the border will remain well above the level of early 2025, BAK Economics points out. Moreover, the US government’s trade policy remains unpredictable.
The investment commitments made in this context – some Swiss companies plan to make direct investments in the US to the tune of $200 billion (CHF161 billion at current exchange rates) – entail two interrelated economic risks: “If the commitments are not fulfilled, there is a risk of new punitive tariffs being introduced. If, on the other hand, they are implemented to the agreed extent, there is a risk of a shift of investments to the USA” to the detriment of investments in Switzerland.
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In this context, private consumption plays a stabilising role. According to the Basel economists, the combination of low inflation, persistently low interest rates and still positive, albeit less dynamic, immigration is supporting household demand.
Slowdown on the labour market
But it is not all doom and gloom. Indeed, the first effects of the gradual deterioration of the labour market have become apparent: the weakness in industry is increasingly spreading to other sectors, while the beginning of the technological transition towards artificial intelligence (AI) is generating caution in the creation of jobs in services.
The unemployment rate, currently 2.9%, is thus expected to rise to 3.3% by the end of 2026. “Overall, consumption will lose momentum, without, however, becoming a risk factor,” say Basel economists, who forecast consumption growth of around 1.2% for the coming year, after 1.4% in 2025.
Impulses from the construction sector
Meanwhile, at least temporarily, impulses are coming from the construction sector. According to BAK Economics, the abolition of the rental value and the consequent planned reduction of the tax deduction for maintenance costs are leading to “significant anticipatory effects” in renovation and refurbishment projects.
Given the high capacity utilisation, this dynamic not only stimulates demand, but also increases construction prices. This creates a temporary special cycle that significantly strengthens construction investment and is expected to continue until 2027.
Despite the price increase in the construction sector, inflation is expected to remain in the lower end of the 0% to 2% range, which is the target range of the Swiss National Bank (SNB). After 0.2% in the current year, only a slight increase to 0.3% is expected for 2026.
BAK Economics is of the opinion that the SNB will not undertake any further interest rate interventions. However, it points out that the risks remain unusually high. A negative interest rate would become a reality if inflation falls surprisingly sharply, if the Swiss franc appreciates significantly against the euro or if the European Central Bank lowers interest rates significantly.
Adapted from Italian by AI/jdp
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