Swiss Q3 GDP Records First Contraction Since 2023

Switzerland’s GDP fell by 0.5% in the third quarter of 2025, reversing the upwardly revised 0.2% growth seen in the previous quarter. This marks the country’s first economic contraction since Q1 2024 and the steepest decline since the early months of the COVID-19 pandemic. The downturn was driven primarily by the chemical and pharmaceutical sector, where earlier export strength was followed by a significant decline due in part to US tariffs. Weakness in services activity compounded the slide, failing to counterbalance the broader industrial slowdown. On the expenditure side, goods exports dropped 4.2%, outpacing the 0.8% decline in imports. Investment also softened, with slight decreases in equipment and software (-0.1%) as well as construction (-0.2%). Government consumption edged down 0.2%, while private consumption offered a modest bright spot, rising 0.4%. Compared with a year earlier, GDP growth eased to 0.8% in Q3 from 1.5% in Q2.

Switzerland's economy contracted by 0.5% quarter-on-quarter in the third quarter of 2025, reversing the 0.1% growth recorded in the previous three-month period, flash estimates showed. It marked the first economic contraction since the second quarter of 2023, reflecting the significant strain imposed by the 39% US tariff introduced in early August that heavily impacted the export-oriented economy. With officials securing a trade agreement last week that reduces the tariff to 15%, pressure on key Swiss export industries is expected to ease and raises the prospect of a rebound in the coming quarters. The contraction was driven largely by a steep decline in value added within the chemical and pharmaceutical sector, while the industrial sector overall also posted negative growth. Moreover, the services sector expanded at a slower-than-average pace.

Switzerland’s GDP grew just 0.1% in Q2 2025, in line with preliminary estimates, and slowing from 0.7% in Q1 as weakness in industry and exports outweighed gains in services. Manufacturing contracted sharply (-2.4%), led by a 4.8% drop in chemicals and pharmaceuticals after a strong Q1 surge tied to US trade policy shifts. Exports fell 2.7% and imports 3.7%. By contrast, services expanded broadly: hospitality (+1.5%), public administration (+1.2%), trade (+1.9%) and healthcare (+0.3%) supported modest domestic demand (+0.1%). Private consumption rose 0.3%, while government spending grew 0.9%. Construction (-0.4%) and equipment investment (-0.8%) declined, reflecting weakness in capital goods, particularly aircraft and R&D. SECO revised its outlook, warning that new US tariffs will weigh on growth. Projections now see GDP at 1.2% in 2025 and just 0.8% in 2026, versus earlier forecasts of 1.3% and 1.2%. While a severe recession is unlikely, certain industries face significant strain.