The final Swiss growth figures for the third quarter, published on Friday, were as weak as preliminary growth estimates adjusted for sporting events, at -0.5% on a quarterly basis. This was slightly below expectations, with the Bloomberg consensus forecasting a contraction of 0.4%. This was the first negative growth since the first half of 2023, notes Michael Pfister, a foreign exchange analyst at Commerzbank.
First negative growth since early 2023 in Switzerland
“The third quarter was significantly affected by US tariffs, which rose to 39% at the beginning of August, while most major trading partners were given lower tariffs. Net exports mainly held back growth; in the first quarter, they had the opposite effect due to early loading effects. So it is advisable to look at the past three quarters in aggregate rather than focusing on individual quarters. Now that a preliminary agreement has been reached with the US and tariffs have been reduced, we are likely to see better numbers in the months “The next one.”
“The most problematic issue for the Swiss economy is its dependence on the pharmaceutical industry. Until about 2014, gross value added in the pharmaceutical sector was growing in line with other industries. However, since then, this relationship has become significantly decoupled. In other words, much of Switzerland’s relatively strong growth in recent years has been due to the pharmaceutical industry, with other sectors contributing less.”
“This dependence may become a problem in the long term, especially as the US administration seeks to shift production for the US market from other countries to the US, and several major Swiss pharmaceutical companies have announced significant investments in the US that will not be made in Switzerland. However, it will likely take several years to see the effects of such shifts in production. In the short term, the contraction in the third quarter due to US tariffs, and the expected recovery in growth, are likely to play a larger role. It is therefore not surprising that the Swiss franc will play a larger role. The Swiss franc rose slightly against the euro on “Friday.”
