«US President Trump's tariffs and tariff threats are increasingly leaving their mark on global trade,» according to the latest growth forecast from BAK Economics.

The growth forecasts for the Swiss economy have been revised downwards. For 2025, the economists now expect gross domestic product (GDP) to grow by 1.2 percent instead of the previously forecast 1.4 percent. For 2026, the expectation has been lowered to 1.2 percent from 1.5 percent previously.

The downward revision in mainly due to weaker global trade and increased uncertainty, which is dampening investment in particular, the report continues. Although cosumer growth remains robust, it is also losing momentum slightly.

Obstacle to Investment

A major uncertainty factor for trade volumes are the tariffs currently imposed, suspended or announced by the USA, including 25 percent on imports from Canada and Mexico, 30 percent on China and 10 Prozent on the EU, Japan and South Korea.

The direct braking effect is small. More serious, however, is the fact that companies will be as reluctant as possible to make far-reaching decisions due to the ongoing trade conflicts, which would represent a significant obstacle to investment.

The forecast for global investment activity is correspondingly lower. Equipment investment in the US is only likely to grow at half the rate originally forecast (new 2025: +2.1 percent). In Germany, a significant decline is even expected (-2.1 percent). «There are no signs of a rapid recovery in investment activity, even if the politically planned fiscal stimulus in Europe should provide some stabilization from 2026,» the report continues.

Trade Barriers for Medicines

BAK Economics does not expect direct US tariffs on Swiss products for the time being. «However, there are already concrete threats of trade barriers, particularly in the area of medicines.»

Swiss exports of goods are only expected to grow by 2.8 percent in 2025, compared to the previous forecast of 3.7 percent. At the same time, investment activity in machinery and equipment will come to a standstill. A figure of 0.1 percent is expected here, compared to previous growth of 1.2 percent.

No SNB Interest Rate Cut in March

The domestic economy in Switzerland – especially consumption and construction investment – is having a stabilizing effect.

The inflation expectation is 0.4 and 0.5 percent for 2025 and 2026 respectively, which means it remains low but still in positive territory.

«Thanks to the significant interest rate cut in December 2024, the SNB was able to prevent inflation from being dampened too much. BAK Economics therefore assumes that the Swiss central bank will not make any further interest rate cuts in March,» it continues.