GDP records slowest increase since Q2 2023 in Q2

GDP reading: GDP expanded 0.1% on a seasonally adjusted quarter-on-quarter basis in Q2 (Q1: +0.4 s.a. qoq), marking worst result since Q2 2023. The figure matched the expansion when adjusted for sporting events, which frequently skew Swiss GDP data due to the country hosting several major global sports organizations. In the second quarter, the economy was weighed down by an unwinding of export frontloading plus weak investment in construction and equipment.

Exports and investment drive slowdown: Household spending increased 0.3% in the second quarter, which was above the first quarter's 0.2% expansion. Public spending, meanwhile, improved to a 0.9% increase in Q2 (Q1: +0.4% s.a. qoq). In contrast, fixed investment swung to contraction, falling 0.6% in Q2, contrasting the 0.7% increase logged in the prior quarter. On the external front, exports of goods and services worsened 11.1% in Q2 (Q1: +11.9% s.a. qoq). In addition, imports of goods and services deteriorated 6.6% in Q2 (Q1: +12.7% s.a. qoq).

GDP outlook: Economic growth will likely be muted for the remainder of 2025, weighed on by high U.S. tariffs imposed from August.

Panelist insight: On the economic fallout from tariffs, Goldman Sachs analysts said: “We expect the 39% US reciprocal tariff to reduce Swiss GDP by about 0.5% over the next year, a sizeable hit to the economy. But we look for the impact to be mitigated by three factors: we now expect pharma tariffs to be postponed until early 2027, Euro area growth prospects have improved, and the drag from trade policy uncertainty has been smaller than anticipated. On net, we now expect a slightly smaller drag from trade in 2025H2 and slightly bigger headwind in 2026H1.”

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