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International and monetary environment

Real economy

The global economy once again saw dynamic growth overall in the third quarter of 2024. There were, however, major differences between the individual countries. GDP in the US, for example, grew at an above-average rate, as in the previous quarter. Growth accelerated in both the euro area and China in Q3. The German economy grew slightly again after a decline in the previous quarter. In the UK and Japan, by contrast, economic momentum has weakened somewhat latterly.

Despite a slight downturn in various countries, the situation in the international labour market is still favourable by historical comparison. Correspondingly, wages have risen in many places. Together with an appreciable weakening in inflation, this is supporting household purchasing power.

Monetary developments

Autumn saw another slight decline in inflation in many countries; in some cases, however, core inflation increased again. To some extent, above-average wage growth is reflected in increases in the price of services. Given the lower inflation figures and outlook, many central banks have recently cut their policy rates further.

The Swiss franc has latterly appreciated further against the euro, reaching a new high in November. Owing to the growing interest rate differential, however, it lost value against other currencies, especially the US dollar.

Questions on the international and monetary environment

Economic situation in Switzerland

Gross domestic product

Economic growth in Switzerland slowed in Q3 2024. GDP adjusted for sporting events rose by around 0.2%, this following 0.4% in the previous quarter. This figure is around the middle of the range compared with Switzerland’s immediate neighbours, with France recording stronger growth, Germany somewhat weaker, and Italy experiencing stagnation. The US in particular saw stronger growth in Q3.

The subdued growth was supported by domestic demand, and in particular by consumption. There was an increase in both household and government spending. The sharp drop in inflation and the continued rise in employment figures and employee compensation had a stabilising effect on the domestic economy.

The construction sector can also look back on a positive quarter. Foreign trade, however, was a source of negative impetus, with a strong increase in the previous quarter followed, as expected, by a pronounced countermovement in goods exports.

For 2024 as a whole, the Expert Group is expecting the Swiss economy to grow by 0.9% (September forecast: 1.2%). The downward revision of its forecast is due to a large extent to the updated basic data used to calculate the national accounts, which shows somewhat lower growth for the first two quarters of the year than was calculated in September.

Labour market

Unemployment in all sectors and population groups increased in October 2024. The most significant increases in the seasonally adjusted unemployment rate compared with the same month last year were recorded in information and communication, hospitality and support service activities (each rising by 0.9 percentage points).

Overall, the unemployment rate in October 2024 was 2.6%, an increase of 0.5 percentage points versus October 2023.

Prices

Since the summer there has been another clear fall in inflation in Switzerland. At 0.6% in October, it was at its lowest level since June 2021. Core inflation (excluding energy and fuel as well as fresh food and seasonal products) continued to decline, and is now stands at 0.8%.

The decline in inflation is mainly due to the prices of oil products and other imported goods, not least owing to the appreciation of the Swiss franc.

Questions on the economic situation in Switzerland

Economic forecasts for Switzerland

Assumptions on the global economy

For the coming year, the Expert Group expects the German and European economies to develop more weakly than previously estimated. Added to this, the Swiss franc is relatively highly valued.

Gross domestic product

In this context, the sectoral structure of the Swiss economy and the fact that its trading partners are broadly diversified help to stabilise the economy. However, the export sectors that are exposed to economic and exchange rate fluctuations are being slowed down. Industrial production capacity is currently underutilised and the order situation is weak, which is likely to further curb investment activity for the time being.

The Expert Group is lowering its economic growth forecast for Switzerland in 2025 slightly to 1.5% (September forecast: 1.6%). This would mean that after two years of subdued growth, the Swiss economy would grow more slowly in the coming year than the historical average (1.8%).

Domestic demand is likely to prove to be the mainstay of growth. Construction activity should continue to pick up as mortgage rates fall. In addition, further increases in employment are expected for the coming year, along with a sharper fall in inflation than previously forecast (2025: 0.3%; September forecast: 0.7%). Consumer expenditure by households would benefit from this.

In 2026, there should be a gradual recovery from the current phase of weakness, particularly in the rest of Europe. Swiss exports and investment spending would also regain momentum as a result. The Expert Group is forecasting 1.7% growth for the Swiss economy in 2026. Average inflation for the year is likely to be 0.7%.

Labour market

In the labour market, the moderate economic momentum is accompanied by rising unemployment. The average annual unemployment rate for 2025 should come to 2.7% (September forecast: 2.6%), followed by 2.7% in 2026.

Questions on the economic forecast

Economic risks

There is a great deal of uncertainty at present surrounding international economic and trade policy and its macroeconomic impact. This forecast does not assume any explicit scenario regarding a possible realignment of economic policy following the change of administration in the US in January 2025.

Trade conflicts

Trade barriers and trade conflicts would pose a major risk to the international economy. It should become possible to make more precise estimates in the next six months. A more pronounced weakening in the development of the economy internationally would have a significant impact on Switzerland’s foreign trade and its domestic economy.

Geopolitics

Added to this, geopolitical risks still exist, particularly in connection with the armed conflicts in the Middle East and Ukraine.

Inflation and financial markets

Inflation could also prove to be more persistent, and monetary easing in the major currency areas could therefore take place more slowly than currently anticipated. In addition, existing risks in connection with global debt, balance sheet risks at financial institutions and risks on the real estate and financial markets could intensify.

If various risks were to materialise, upward pressure on the Swiss franc would have to be expected.

Questions on the economic risks