The case

Switzerland’s economic growth is expected to remain subdued in 2026, with the GDP expansion projected at just under 1 %.

Source: swissinfo & UBS

The commentary

The outlook is constrained by a weaker domestic demand, a tightening labour market and continued uncertainty surrounding US import tariffs. Inflation is forecast to stay low, remaining below 1 %, providing little pressure on prices but also signalling limited economic momentum.

Labour market risks represent a key downside. A potential deterioration in employment conditions could further dampen household consumption, while nominal wage growth is expected to slow after two years of increases.

External demand is likely to offer only modest support. US trade tariffs are expected to weigh on exports, although this may be partially offset by a recovery in Germany. Germany’s recent fiscal shift, including expanded defence spending and a € 500 billion infrastructure investment programme, could generate positive spillover effects for Switzerland. Despite all this, the timing and effectiveness of this stimulus remain uncertain.

Overall, Switzerland enters 2026 facing a fragile growth environment, with limited domestic drivers and elevated external risks. Economic performance will largely depend on labour market resilience and the extent to which European fiscal stimulus translates into cross-border economic gains.