UBS confirms its growth forecasts for Switzerland

UBS economists have confirmed their growth forecasts for Switzerland following the announcement of new US tariffs.

UBS economists still forecast growth in gross domestic product (GDP), adjusted for sporting events, of 0.7% this year and 1.4% year.

Whilst these new tariffs will certainly undermine the competitiveness of Swiss exporters in the US market, they will not do so to an extent likely to weigh heavily on the Swiss economy, Switzerland’s leading bank said in a statement on Friday.

“Exports to the United States are expected to contribute only very marginally to economic growth this year and next,” say UBS economists. In their view, the recovery of the Swiss economy in 2027 is likely to be driven primarily by the expected recovery of the European economy.

If this recovery materialises, the Swiss National Bank (SNB) is expected to begin scaling back its monetary stimulus measures from the middle of next year by gradually raising its key interest rate.

Uncertain future developments

The future trend in customs duties remains difficult to predict. “It is entirely possible that the United States will impose new duties on Switzerland,” suggest UBS economists.

However, the conclusion of a trade agreement, setting a ceiling on customs tariffs at 15% – similar to the one already concluded between the United States and the European Union (EU) – remains the preferred scenario. “But it cannot be ruled out that, until such an agreement is reached, customs duties may temporarily exceed 15%,” the press release states.

Higher tariffs would certainly place a greater burden on exports to the United States. Nevertheless, other factors, notably the strength of domestic demand and developments in the European economy, will remain far more decisive for the Swiss economy over the coming quarters, according to the bank with the three keys.

For this reason, the uncertainties surrounding tariffs pose only a limited downside risk to the Swiss economy.

On the other hand, temporarily higher tariffs could delay the Swiss economic recovery and, as a result, also push back the timing of the Swiss National Bank’s (SNB) first interest rate rise next year.

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Translated from German, reviewed by an English Department journalist.