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Swiss Economy Contracts Sharply Amid US Tariff Dispute
17 Nov
Summary
- Swiss GDP fell 0.5% in Q3 2025 due to sharp decline in chemical and pharmaceutical sectors
- US tariff deal on Friday could boost Swiss GDP by up to 0.5 percentage points
- Eurozone GDP grew 0.2% in Q3 2025, outperforming Switzerland
According to the latest data, Switzerland's economy experienced a significant contraction in the third quarter of 2025. GDP fell by 0.5% between July and September, a much larger drop than the 0.1% decline expected by analysts.
The primary driver behind this economic downturn was a sharp decline in the chemical and pharmaceutical sectors, which contributed to an overall contraction across the industrial sector. While the services sector continued to expand, it grew at a below-average rate.
The Swiss economy's performance fared worse than the Eurozone, which saw 0.2% growth over the same period. Analysts attribute this to the impact of a 39% tariff imposed by US President Donald Trump in August 2025, which was finally softened in a deal struck on Friday.
The tariff deal could potentially boost Switzerland's annual GDP by up to 0.5 percentage points, increasing growth in 2026 to well above 1%. However, experts warn that the deal is only based on a non-binding memorandum of understanding and still "could all fall through."
Separately, the European Commission has downgraded its forecast for Eurozone growth in 2026, citing the impact of US trade tariffs. The commission now expects the currency bloc to grow by 1.2%, down from the 1.4% it had predicted earlier this year.
