Economists at UBS have revised their growth forecast for the Swiss economy in 2025 due to concerns about the eurozone's sluggishness.
The new projection for Swiss GDP growth has been adjusted down to 1.3 percent from the previous estimate of 1.5 percent. When accounting for the impact of sporting events, the adjusted growth figure stands at 1.5 percent, a slight decrease from the previous 1.7 percent. This adjustment reflects the interconnectedness of the Swiss economy with the eurozone, which is expected to have a weaker-than-anticipated economic recovery.
The UBS report also highlights that the subdued economic performance in the eurozone is likely to hinder the recovery of Swiss industry. Despite these challenges, UBS maintains that the Swiss economy will still see some recovery compared to the current year, with a projected GDP growth of around 1 percent for 2024.
The report also predicts a sharper decline in inflation rates than previously anticipated, with an inflation forecast of 1.1 percent for the current year and a further drop to 0.7 percent expected in 2025. However, uncertainties surrounding domestic demand remain moderate, with potential risks from rising health insurance premiums and increasing unemployment rates.
UBS warns of the risks that could derail the recovery in both the eurozone and Switzerland, emphasizing the importance of monitoring developments in the eurozone closely. The interplay between domestic factors and external factors, such as the eurozone's economic health, will be critical in determining Switzerland's economic recovery in the coming years.