Swiss GDP growth slowed sharply in Q2 2025. According to the UBS Chief Investment Office Global Wealth Management (UBS CIO GWM), and adjusted for sporting events, the economy expanded by just 0.1 percent quarter-on-quarter.

The slowdown was mainly attributed to weaker exports, which declined between April and June after having a strong Q1 boosted by front-loading ahead of U.S. tariffs. Pharmaceutical exports in particular saw a marked drop.

However, growth still came in above expectations, as expansion in the service sector offset the industrial decline.

Consumption Supports Growth

Private consumption was a key contributor, helping the economy to post modest growth in Q2. Household consumption rose 0,3 percent quarter-on-quarter, while government consumption increased by 0,9 percent.

For the full year, UBS economists forecast GDP growth of around 1,3 percent (adjusted for sporting events), up from the April projection of just 1,0 percent.

«While foreign trade will be weighed down by the tariff dispute in the coming quarters, consumption should continue to support the economy. For next year, we expect growth of around 0,9 percent.»

Much will depend on how tariff negotiations with the U.S. develop. In their baseline GDP forecast, UBS assumed a U.S. tariff rate of 15 percent (excluding gold and pharmaceutical exports). If tariffs remain at 39 percent, GDP growth could decline by up to 0,4 percentage points.

UBS also sees up to 0,4 percent of jobs at risk under such a scenario. However, Switzerland's short-time work model should help cushion the impact on the labor market and limit unemployment.

Medium-Term Decline in Pharma Exports

UBS experts expect the pharmaceutical sector to face high tariffs unless companies agree to supply the U.S. market directly from U.S.-based production. «The Swiss pharmaceutical industry is likely to build sufficient production capacity in the U.S. over the medium term to serve the American market and avoid high tariffs.» This, however, would erode Switzerland's trade surplus and weigh on growth over the medium term.»

(Source: UBS)