The final Swiss growth figures for the third quarter, published on Friday, were ultimately as poor as the initial estimate of growth adjusted for sport events, standing at -0.5% quarter-on-quarter. This was slightly below expectations, with the Bloomberg consensus predicting a contraction of 0.4%. This was the first negative growth since the first half of 2023, Commerzbank's FX analyst Michael Pfister notes.

First negative growth since early 2023 for Switzerland

"The third quarter was significantly impacted by US tariffs, which increased to 39% at the start of August, while most major trading partners were granted lower tariffs. Net exports have essentially caused growth to slump; in the first quarter, they had the opposite effect due to front-loading effects. It is therefore advisable to consider the past three quarters in aggregate rather than focusing on individual quarters. Now that a preliminary deal has been reached with the US and tariffs are being reduced, we are likely to see better figures in the coming months."

"A more problematic issue for the Swiss economy is its dependence on the pharmaceutical industry. Until around 2014, gross value added in the pharmaceutical sector grew in line with other industries. However, since then, this relationship has become significantly decoupled. In other words, much of Switzerland's relatively strong growth in recent years has been due to the pharmaceutical industry, with other sectors contributing less."

"This dependence could become problematic in the long term, particularly as the US administration is seeking to shift production for the US market from other countries to the US, and several large Swiss pharmaceutical companies have announced substantial investments in the US that would not be made in Switzerland. However, it will probably take several years to see the effects of such production shifts. In the short term, the contraction in the third quarter due to US tariffs, and the expected recovery in growth, are likely to play a greater role. It is therefore not surprising that the Swiss Franc (CHF) gained slightly against the euro on Friday."