Raiffeisen's GDP forecast for 2025 predicts a growth of 1,3 percent for Switzerland (adjusted for major events). For the concluding year 2024, growth is expected to reach +1,1 percent.

This means that the economy will once again fall short of its potential, according to the presentation of the economic outlook on Thursday.

The outlook highlights the «extremely resilient dynamics» in the significant chemical and pharmaceutical sectors. Additionally, the outlook for consumption has improved. This is supported by robust employment growth in the services sector and rising real wages. Inflation in 2025 is projected to be significantly lower at 0,5 percent.

US Trade Policy Crucial

Raiffeisen's Chief Economist, Fredy Hasenmaile (pictured below), identifies the future U.S. trade policy under President Donald Trump as the greatest uncertainty. «As long as there is no greater clarity about the future trade policy of the U.S., the substantial uncertainty will weigh on business sentiment worldwide, particularly in Europe,» he said.

(Image: Raiffeisen)

«Should the tariffs target only China, this could even have a positive effect on the European economy due to diversionary tendencies. However, tariffs directed at Europe would clearly have a negative impact.»

Political Uncertainty in Germany and France

Switzerland is already experiencing weak demand from its neighboring countries. «The largest EU countries, Germany and France, are in a difficult and uncertain economic and political situation.» The situation in Germany is already having a noticeable impact on Swiss companies, particularly among automotive suppliers and the industrial sector. France’s economic influence is smaller but can clearly affect the Euro-to-Swiss-Franc exchange rate.

In some areas, a declining need for workers has been observed. However, demand in the service sector continues to grow. Raiffeisen estimates the Euro-to-Swiss-Franc exchange rate to hover around 0,92 for next year, only slightly lower than current levels. The Swiss National Bank is expected to lower interest rates further, with a reduction of 25 basis points (bp) to 0,75 percent anticipated in next week’s decision.

Further Decline in Interest Rates

Hasenmaile expects interest rates to continue approaching zero, and even negative interest rates cannot be ruled out for 2026. «Interest rate decisions will heavily depend on the Swiss Franc exchange rate.»

The supply of funding for corporate investments remains strong, with no credit crunch in sight. However, financing has become more expensive. «We see a need for diversification in financing,» it was noted.

Looking at the real estate market, Raiffeisen predicts falling interest rates and rising yields, which are expected to return to the 230-240 bp range. This could reignite interest from institutional investors. However, a return to the boom years prior to 2020 is not anticipated.