By John Revill
ZURICH (Reuters) -The Swiss government trimmed its economic growth forecasts for 2025 and 2026 on Tuesday, citing global trade tensions, although it expects the country to avoid a recession.
The Swiss economy will grow by 1.4% in 2025, a slight downgrade from the 1.5% increase forecast in December and below the long-term average growth rate of 1.8%.
The experts group at the State Secretariat for Economic Affairs (SECO) said they expect 2026 growth at 1.6%, down from its previous forecast for a 1.7% growth rate.
Concerns have grown around the rising risks of a global trade conflict, triggered by U.S. President Donald Trump ramping up tariffs and countermeasures announced by Europe.
“The current forecasts assume that there will be no escalating global trade war,” SECO said. “Nevertheless, some negative effects are to be expected,” it said, highlighting how uncertainties were weighing on investment decisions and economic captivity.
SECO also outlined a negative scenario, with U.S. tariffs on China of 60% and 25% versus other countries, triggering targeted counter measures against the U.S.
In such a situation, Switzerland would be hit by a decline in global demand as well as tariffs on exports to the United States, its biggest market, SECO said.
Under these circumstances, Swiss GDP growth would decline to 1.1% in 2025 and 0.8% in 2026, it said.
“In a trade dispute it would be very disadvantageous for the Swiss economy to caught between the U.S. and the EU, and maybe also China,” said Eric Scheidegger, head of the economic policy directorate at SECO.
“Such a scenario cannot be ruled out, but this is not part of our base case or our negative scenario. I would say an escalation of the trade conflict is much more conceivable,” he told reporters.
SECO also outlined a positive scenario with Swiss economic growth of 1.4% this year and 2.0% in 2026, as initiatives like Germany’s fiscal programme and higher spending on infrastructure and defence in Europe boost demand in Switzerland.
Scheidegger declined to give a probability for each outcome, but said the base case was the most likely outcome, followed by a negative situation, with the chances of a positive outcome only small.
“From today’s point of view, the chances of a recession are unlikely,” he said, although developments like a sharp appreciation of the Swiss franc could weigh on growth.
Switzerland is traditionally one of Europe’s more resilient economies and was protected from downturns by its strong pharmaceutical sector and internal market.
SECO said it also expected Swiss inflation to remain low, at 0.3% this year and 0.6% in 2026. Unemployment will be 2.8% over both years, slightly higher than previously forecast.
(Reporting by John Revill, Editing by Friederike Heine and Chizu Nomiyama )
