The economists at Raiffeisen Switzerland have significantly raised their GDP forecast for Switzerland for the current year 2026 from 0.8 to 1.7 percent.

The forecast now lies within the range mentioned by the SNB at its most recent monetary policy assessment in September. For the full year, growth is currently expected to be between 1.5 percent and 2 percent. As factors for

“The Swiss economy is once again moving close to its potential path and is proving more resilient than expected,” Raiffeisen writes in its “Economic Check October”. Momentum was surprisingly much stronger than expected only a few months ago. The main reason cited is the robust performance of the pharmaceutical industry. Although the strong growth figures have overstated the economic trend, the domestic economy remains on a path to recovery.

Exceptionally Strong Momentum in the Pharmaceutical Sector

Whether the exceptionally strong momentum in the pharmaceutical sector will continue is questionable. The experts point, for example, to plans to relocate production and research capacity to the US. In addition, company statements would suggest that the livelier business activity following the outbreak of the Iran war was at least partly due to increased stockpiling in order to prevent supply chain problems.

The unresolved Iran conflict and higher energy prices are headwinds for the economy. In particular, the disproportionate rise in fuel prices is weighing on companies and households.

However, the still stable economic situation in the euro countries is also supporting demand among Swiss exporters. “Even without a break in the recovery, we therefore expect more moderate GDP growth again next year.”

Inflation Still Expected to Remain Within the Target Band

At its September meeting, the Swiss National Bank saw no reason to adjust its monetary policy stance. Despite the inflationary effects of higher energy prices and the weaker franc, inflation is expected to remain within the target range of 0 to 2 percent.

Overall inflation in Switzerland has recently edged up slightly. In September, annual inflation stood at 1.0 percent, up from 0.8 percent in August and 0.4 percent in July.

In the labour market, the slowdown was recently confirmed and the unemployment rate remained at 3.1 percent. The cyclical autumn pickup is clearly weaker than in previous years. 

Signs of the End of the Zero-Interest Era

Taking the overall picture of the economy, inflation and the franc’s external value into account, a window is now opening for the SNB to bid farewell to its zero-interest-rate policy, Raiffeisen writes. Signs that the zero-interest era is coming to an end are increasing. “For the first time since the return to zero interest rates, we already expect the SNB to raise its policy rate from 0.00 to 0.25 percent in December,” the assessment says.

In the interest-rate markets, a gradual move away from zero-interest policy has already been priced in for 2027. This has also already been reflected in moderately higher long-term CHF rates.