Switzerland

The Swiss economy experienced a growth slowdown to +0.8% in 2023, attributed to the past real appreciation of the Swiss Franc, weak external demand and reduced investment. However, a gradual recovery in external demand, coupled with lower inflation and easing monetary policy, is expected to boost growth to +1.2% in 2024 and +1.6% in 2025. Growth is supported by strong structural foundations in private consumption, including a resilient labor market and a more dynamic industrial sector. Notably, insolvencies in Switzerland are still slightly increasing and are at historically high levels. For 2024, insolvencies are projected to increase by another +5.6% compared to 2023, followed by a decline of -11% in 2025 relative to 2024.

Inflation is decreasing even in the face of elevated service costs, which put upward pressures on core inflation. We project an inflation rate of 1.3% for 2024. On one hand, the disinflationary trend is being supported by lower prices for goods and energy, aided by last year's nominal appreciation. On the other hand, rising rents and persistent high service inflation are moderating this decline. With wage growth around 2%, labor costs will continue to influence prices, contributing to historically high inflation rates in the services sector. We anticipate an inflation rate of 1.2% in 2025. As a result, Swiss inflation is expected to remain within a manageable range and below the target of the central bank.