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Investing.com -- Switzerland’s economy grew by 0.1% in the second quarter of 2025, slowing significantly from the 0.8% expansion recorded in the first quarter but beating consensus expectations for a contraction.
The GDP figure, adjusted for sporting events, came in slightly below Capital Economics’ forecast of 0.2% growth but above the consensus estimate of a 0.1% decline.
According to the limited details provided in the official release, growth in the services sector offset contractions in industrial activity.
The slowdown likely hit the pharmaceutical industry hardest, following a first-quarter rush to export goods to the United States ahead of tariff implementation.
Consumer spending may have also weakened during the quarter, with retail sales falling 0.4% compared to the previous three months.
The Swiss economy faces significant headwinds from current U.S. tariffs, which stand at 39% excluding gold and pharmaceuticals. If these tariffs remain in place, they could reduce Swiss GDP by approximately 0.6% in the medium term.
Should the pharmaceutical exemption be removed, the impact could reach 1-2%, potentially triggering a brief recession.
Trade negotiations with the U.S. have shown little progress over the past two weeks. Switzerland has considered unconventional bargaining approaches, including offering to relocate FIFA headquarters to the U.S. or implementing a special tax on gold exports to America.
While these measures would have minimal economic impact on Switzerland, it remains unclear if they would address U.S. concerns about trade imbalances.
With inflation approaching zero, Capital Economics predicts the Swiss National Bank will cut its policy rate by 25 basis points to -0.25% this year, most likely at its September meeting.
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