The Swiss economy continued to grow in the first quarter of 2026, though conflicts in the Middle East may hinder the pace of recovery in the coming months.
Data released by the Swiss Federal Statistical Office on Monday showed that gross domestic product for the quarter ending in March increased by 0.5% compared to the previous quarter, extending the 0.2% growth recorded in the fourth quarter of 2025.
According to the statistical office, both the industrial and service sectors contributed to the economic growth.
However, the situation in the Middle East is casting a shadow over Switzerland's economic outlook.
As early as late March, the Swiss Economic Institute (KOF) issued a warning that rising energy prices had already prompted companies to reduce investment. While household consumption remained robust, prolonged conflict could dampen market demand.
The institute noted that the chemical and pharmaceutical industries showed relatively strong resilience, whereas sectors such as watchmaking, machinery, and electronics were more vulnerable to weak global demand and heightened market uncertainty.
Under a baseline scenario where the conflict's impact remains limited, the economic research institute forecasts that Switzerland's real GDP growth, excluding the boost from major sporting events, will be 1.0% in 2026 and 1.7% in 2027.
Even before the escalation in the Middle East, Switzerland's economic growth rate had already fallen below its long-term average of 1.8%. In 2025, affected by U.S. tariff increases, the export-oriented economy—home to high-end watchmakers and leading pharmaceutical companies—recorded full-year GDP growth of only 1.4%.
The Middle East conflict has introduced additional economic risks, with rising energy prices and increased financial market volatility serving as primary channels of impact.
The Swiss National Bank expects the country's economic growth this year to be just 1%. Meanwhile, the Swiss Economic Institute estimates that under an adverse scenario—where international oil prices remain 30% above baseline levels—Switzerland's GDP growth would slow to 0.7% in 2026 and drop to 1.5% in 2027. By the end of 2027, GDP would be 0.6% lower than the baseline forecast.
The institute also cautioned that during periods of geopolitical turmoil, the Swiss franc is often viewed as a safe-haven currency. Sustained appreciation of the franc could further erode the competitiveness of Swiss exporters.
On March 19, the Swiss National Bank announced it would keep interest rates unchanged while sending a clear signal: in response to the impact of the Iran conflict, as market funds rush into safe-haven assets, the bank is increasingly inclined to intervene in the foreign exchange market to curb excessive appreciation of the franc.
The final economic growth figures for the first quarter are scheduled to be officially released on June 1.
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