Economy: Subdued start to the year

 
The Swiss economy is still facing a challenging situation. As an export-driven economy with strengths in sectors  such as  the pharmaceutical industry and mechanical and metal construction, it is heavily dependent on foreign demand. However, when measured by exports in November 2025, this demand remains well below the level that was still normal in 2024 and early 2025. In this context, sentiment among industrial companies deteriorated further in December. Fortunately, this economic weakness has so far had a very limited impact on consumer activity, which increased significantly in 2025, supported by strong wage growth. There is also hope that the reduction in tariffs on the US market negotiated  in mid-November will provide some relief.

Growth, sentiment and trend

In percent

The performance of the US economy remains uncertain, as crucial economic data from September onwards is missing due to the government shutdown. However, given the sentiment numbers available, it seems clear that the weakness in the construction and industrial sectors continued at the end of the year. The situation on the labour market is also worrying. The number of jobs fell by 68,000 in the fourth quarter. In the past, such a development has always been associated with the start of a recession. Whether the economy grew despite this depends largely on consumption, but the statistics for this are lacking. Core inflation,  which  excludes volatile components, stood at 2.6 percent in December, down from 3 percent in September. We have to hope that this decline doesn’t primarily reflect economic weakness.

Growth, sentiment and trend

In percent

Unfortunately, the economic recovery seen during the autumn months didn’t continue at the end of the year. Sentiment numbers among industrial and services companies and  among consumers deteriorated  slightly in December 2025, but this was primarily due to a setback in Germany, the largest economy. In some countries, such as Spain and Ireland, economic momentum remains high. It’s also encouraging that inflationary momentum slowed slightly in December. Overall inflation has fallen by 0.1 percentage points to 1.9 percent, while core inflation remains unchanged at 2.3 percent. However, the current figures are still a little too high to provide lasting relief for the European Central Bank (ECB).

Growth, sentiment and trend

In percent

Economic development in emerging markets continues to be dominated by significant regional differences. The situation is still uncomfortable in China, by far the largest economy within the group, where the economic downturn has recently become more pronounced. While growth in consumer spending is now minimal, investment activity by companies and individuals is well below the previous year’s level. A particular challenge is that the decline in prices on the property market has recently accelerated again. This is putting additional pressure on consumer spending, as a large proportion of private households’ savings are tied up in real estate. Meanwhile, economic growth is much stronger in India, predicted to have grown by over 7 percent in 2025, and Vietnam, which is benefiting from a sharp rise in exports.

Growth, sentiment and trend

In percent