Source: KOF Swiss Economic Institute
Zurich, 09/30/2026
The Swiss economy performed significantly better than expected in the first half of 2026. Together with upward revisions to the national accounts, this has led the KOF Swiss Economic Institute to raise its growth forecast substantially: real GDP excluding major international sporting events is now expected to grow by 1.9% in 2026 (summer forecast: 0.8%) and by 1.7% in both 2027 and 2028. Uncertainty remains high.
Despite the pressures from US tariff policy and elevated energy prices, the global economy has so far proved resilient. The Swiss economy also performed better in the first half of 2026 than expected in the summer forecast. The second quarter in particular surprised on the upside. In addition, revisions to the national accounts paint a significantly more favourable picture of past economic developments.
Strong first half shapes growth in 2026
Goods exports rose sharply in the second quarter, driven predominantly by pharmaceutical exports. Private consumption as well as construction and equipment investment also made positive contributions to growth. The expansion in industry was broad-based in the first half of the year: alongside the chemical and pharmaceutical industry, the other areas of manufacturing also recorded substantial gains.
Annual growth in 2026 is therefore largely determined by the strong first half of the year. The KOF Swiss Economic Institute expects a temporary pause in growth in the third quarter before the economy returns to moderate expansion in the fourth quarter. The output gap is likely to be almost closed at present. Over the remainder of the forecast horizon, aggregate output is also expected to remain broadly in line with its potential.
Investment picks up, consumption remains supportive
The new data paint a considerably more favourable picture of investment in particular. Both construction and equipment investment were revised sharply upwards for 2025. The recovery in construction investment continued in the first half of 2026, and the outlook for the coming quarters remains positive. Further growth is expected in both residential construction and construction for industry, trade and services.
Equipment investment, by contrast, was more subdued in the first half of the year. However, important leading indicators have recently improved: order backlogs and capacity utilisation in industry have increased, while firms’ earnings situation has also improved. Overall, the KOF Swiss Economic Institute expects gross fixed capital formation to grow by 1.3% in 2026 and 2.7% in 2027.
Private consumption also supports domestic demand. Following a weak start to the year, it picked up again in the second quarter. Consumer sentiment has improved, retail sales have recovered and there are also signs of easing conditions in the hospitality sector. In addition, according to the new data, households’ disposable income is significantly higher than previously assumed, providing additional scope for consumer spending.
Improved outlook in Europe supports foreign trade
The global economy remained robust in the second quarter despite heightened geopolitical uncertainty and higher energy prices. The euro area in particular performed better than expected. Sentiment indicators have also improved recently across many countries and sectors. The growth outlook for Germany has been revised substantially upwards. Over the remainder of the forecast horizon, the global economy is expected to expand at a moderate pace.
Following the pronounced fluctuations of recent quarters, Swiss foreign trade is also expected to normalise gradually. The improved outlook in important European export markets and signs of stabilisation in parts of the export-oriented manufacturing sector are underpinning this development. The machinery and electrical engineering industry in particular appears somewhat more resilient, while the pharmaceutical industry continues to provide important growth impulses. However, the burden from US tariffs and weak demand in some export markets remains.
Employment rises, unemployment remains elevated
Revised employment data and the unexpectedly strong second quarter paint a more favourable picture of labour market developments. Full-time equivalent employment is expected to increase by 1.5% in 2026, compared with just 0.5% in the summer forecast. However, the strong annual increase is largely attributable to data revisions and the robust first half of the year. Given mixed signals from labour market indicators, the KOF Swiss Economic Institute expects only limited job creation in the second half of the year.
At the same time, unemployment remains elevated. The KOF Swiss Economic Institute assumes that part of the recent rise in unemployment is structural and will therefore not be reversed by a cyclical recovery alone. The unemployment rate according to SECO is expected to average 3.1% in both 2026 and 2027 before edging down to 3.0% in 2028.
Inflation remains low – SNB expected to raise policy rate
Nominal wage growth is expected to weaken further through 2027. Given persistently low inflation, however, this should still result in modest real wage gains. Higher energy prices are temporarily adding to price pressures, but there have so far been only limited signs of second-round effects. The KOF Swiss Economic Institute expects inflation of 0.6% in 2026, 0.6% in 2027 and 0.5% in 2028.
The Swiss National Bank (SNB) left its policy rate unchanged at 0% in September. The KOF Swiss Economic Institute expects the SNB to raise its policy rate by 25 basis points at its next monetary policy assessment. The policy rate is then expected to remain unchanged over the remainder of the forecast horizon.
Uncertainty remains high
The forecast remains subject to considerable uncertainty. A further escalation of conflicts in the Middle East could disrupt energy supplies more severely and prolong the energy price shock. Renewed US tariff increases or weaker growth in important export markets could also weigh on the Swiss export economy. In addition, concerns about the sustainability of public finances in highly indebted economies could lead to higher risk premia and tighter financing conditions, thereby weighing on the global economy.
Upside risks could arise from an easing of geopolitical and trade tensions. If European investment programmes are implemented more quickly or utilised more fully than assumed, they could provide additional support to demand. A faster diffusion of artificial intelligence could also trigger additional investment and allow productivity gains to materialise earlier than assumed in the forecast.
KOF Economic Forecasts: official forecast page.