Switzerland's KOF institute expects economic growth to slow next year despite trade deal

The outlook for the international environment has slightly deteriorated compared with the previous forecast, it said. In the euro area, growth remained weak in the third quarter, while a boost from increased government spending in Germany is facing delays.

Swiss economic growth will slow in 2026, the KOF Institute at ETH in Zurich forecast on Monday, as the positive impact of the agreement to reduce U.S. tariffs is offset by a deterioration in the international outlook. For 2025, KOF expects the Swiss economy to grow by 1.4%, when the effect of sporting events is removed, before slowing to 1.1% in 2026 and then rising to 1.7% in 2027.

All the figures are below the long-term average growth rate for the Swiss economy, which the government says is 1.8%. The 2026 and 2027 forecasts were slightly higher than the previous KOF forecast in September, reflecting the preliminary agreement to reduce U.S. tariffs on Swiss exports from 39% to 15%.

Still, uncertainty remains high, as the mutual declaration of intent does not yet constitute a legally binding agreement, KOF said. The outlook for the international environment has slightly deteriorated compared with the previous forecast, it said.

In the euro area, growth remained weak in the third quarter, while a boost from increased government spending in Germany is facing delays. In the United States, weakening consumer sentiment, soft labour market data and the most recent government shutdown all point to a cyclical slowdown, KOF said.

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