UBS economists do not expect a recession in Switzerland
Keystone-SDA
US President Donald Trump’s tariff hammer is hitting the Swiss economy hard. If tariffs remain at the current level, Swiss GDP growth could be noticeably lower than previously assumed, according to a UBS study. However, a recession is not expected.
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If the current tariff rate of 39% remains in force, Swiss gross domestic product (GDP) growth could be up to 0.4 percentage points lower than forecast over the next four quarters, UBS wrote in its economic outlook published on Tuesday. This is because Swiss exports to the US would become 50% more expensive overall, as the 10% depreciation of the US dollar would be added to the 39% tariff surcharge.
For 2025, the experts continue to assume GDP growth of 1.3% adjusted for sporting events. On an unadjusted basis, the forecast remains at +0.9%.
For 2026, the UBS economists are still forecasting GDP growth of 0.9% on an adjusted basis. On an unadjusted basis, growth of 1.3% is expected. The bank’s economists revised this forecast downwards by 0.1 percentage points at the end of August.
+ How the new US tariffs are already impacting the Swiss economy
No recession
However, the effects of the customs shock are not so great that they would push the Swiss economy into a recession, they said.
However, this estimate does not yet include any shifts in pharmaceutical production, UBS added. The Swiss pharmaceutical industry is likely to relocate its production for the US market to the United States in the medium term due to the tariff threats.
The UBS economists have worked out two scenarios. If pharmaceutical companies were to relocate all production for the US market from Switzerland to the US, the pharmaceutical industry’s export volume would fall by 30%. Over five years, this would cost the Swiss economy around a quarter of its growth, the UBS economists explained.
In the second scenario, the rest of the world would be able to compensate for the drop in demand for pharmaceuticals in the US. As a result, pharmaceutical exports from Switzerland would fall by 17%. The Swiss economy would then lose around 15% of its growth over the next five years.
Translated from German by DeepL/ts
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