Switzerland: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Alternate Executive Director for Switzerland

The 2025 Article IV Consultation with Switzerland highlights that growth is projected to gradually converge to potential by 2028, with near-term performance constrained by global trade tensions and uncertainty. The baseline assumes continued geopolitical uncertainty and modest global growth. Near term growth will remain below potential, with a gradual recovery through 2030. Inflation will remain subdued. Risks are broadly balanced. Geopolitical fragmentation, volatile energy prices, and trade policy shifts could weigh on exports and investment. Safe-haven flows could prompt further franc appreciation. The moderately expansionary 2025 stance appropriately supports the economy, but aging, climate goals, defense needs, and pension reforms require a medium-term strategy that aligns rising spending demands with the requirements of the debt-brake rule. Disinflation and softening labor conditions led the Swiss National Bank to cut rates to zero in mid-June. With limited room for further easing, careful tool calibration and enhanced communication are essential to guide expectations in a low-rate, high uncertainty environment. Retaining global productivity leadership requires easing administrative burdens, improving R&D and access to finance for small firms, and preserving external market access to sustain resilience amidst global fragmentation.