BERN: US President Donald Trump's tariff hammer has hit the Swiss economy hard. Gross domestic product (GDP) shrank by a surprisingly significant -0.5% in the third quarter on an adjusted basis.
This is according to the initial estimate published by the State Secretariat for Economic Affairs (Seco) on Monday. According to the communiqué, the chemical-pharmaceutical industry in particular recorded a significant decline in the third quarter compared to the previous quarter. While industry as a whole recorded a negative development, the services sector only grew at a below-average rate.
As a reminder: in the middle of the third quarter, on August 1, Trump imposed import tariffs of 39% on Switzerland - one of the highest levels ever. The decision came as a shock and caused great uncertainty in broad sections of the Swiss economy, especially in sectors that are heavily dependent on exports. The initial effects and signs of a slowdown were quickly visible, for example in the sharp decline in export figures for the watch and tech industries.
Weaker than expected
Economic development has therefore been significantly worse than economists expected. In a survey by the news agency AWP, the range extends from -0.3 percent to +0.2 percent.
The slowdown in the Swiss economy is thus continuing at an accelerated pace. Growth had already shrunk to a meagre 0.2 percent in the second quarter, after an increase of 0.8 percent in the first quarter of the year.
In an initial assessment, economist Valentino Guggia from Migros Bank is particularly surprised by the decline in the chemical and pharmaceutical industry, as this was not affected by the US tariffs. "Apparently, the generally weak global demand and the strong franc are affecting the sector more than expected," he said. In addition, the crisis is continuing in the rest of the industry, which was already struggling before the US tariffs. From this perspective, the tariff agreement with the United States gives hope for the necessary boost, but he still expects a difficult situation for the coming quarters and at best a marginal economic acceleration.
For Claude Maurer, Chief Economist at the economic institute BAK Economics, the current economic picture is a bit like a pan of spaghetti from above: "Everything is pointing in a different direction and is jumbled up". Through the spaghetti, however, a picture emerges of an economy in which individual sectors are clearly suffering from the tariffs, but some of the effects have been temporarily cushioned by restocking. The customs deal announced on Friday should reduce these burdens somewhat.
Significantly more negative for corona
According to the Seco figures, GDP was last negative in the first quarter of 2024 at -0.1% and in the second quarter of 2023 at -0.3%. Meanwhile, the slump was much sharper during the lockdown in the first coronavirus phase. At that time - i.e. in the second quarter of 2020 - GDP fell by 6.4% after the first quarter of the year (-1.1%) had already been clearly negative.
The current data is based on a quick estimate by Seco. Basic data that is still incomplete is supplemented with forecast values. The complete and updated data available later could still change the result. The official estimate for the third quarter will be published on November 28.
(bluewin . ch)
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