Economy: Recovery under threat

Swiss economic performance is still dominated by weakness in the export sector. In recent months, export volumes have settled at a lower level than before the introduction of US tariffs and are largely stagnating. Against this backdrop, overall economic activity failed to pick up in the first two months of the year, according to the economic indicator compiled by the State Secretariat for Economic Affairs (SECO). To make matters worse, consumer spending is also showing the first signs of weakness. Retail sector sales in January were 1.1 percent lower than in the same month last year. The slightly improved overall economic sentiment offers some hope, although this was surveyed before the outbreak of the war in Iran. Another positive factor is that, unlike in many other countries, inflation remains stable within the Swiss National Bank’s (SNB) target range.

Growth, sentiment and trend

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US economic growth slowed considerably in the fourth quarter of 2025 compared to the strong summer half-year. Of particular concern is the situation on the labour market, where the number of jobs has  fallen. In the past, job losses of this kind have always coincided with the start of a recession. Economic figures remained correspondingly weak at the start of the year, although this is likely to have played a role in further easing inflationary pressure. The inflation rate has now fallen to 2.4 percent. The perceptible improvement in sentiment among industrial and service sector companies in January and February also offers cause for hope. However, the war in Iran and higher energy prices are threatening to slow these signs of recovery.

Growth, sentiment and trend

In percent

Economic growth in the eurozone remains solid, driven by strong domestic activity and stabilized industry. Within the industrial sector, the modest signs of recovery in Germany − which recorded a significant increase in order intake at the start of the year − are a particular help. However, the recent resurgence in inflation is a cause for concern, alongside potential negative economic effects from the war in Iran. The core rate, which excludes volatile price components such as energy and food that cannot be controlled by a central bank, now stands at 2.4 percent again – and is therefore above the target. This is likely to prevent the European Central Bank (ECB) from making further interest rate cuts for the time being.

Growth, sentiment and trend

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The economic situation in emerging markets continues to be dominated by significant regional differences. Growth is still being driven by India, where business sentiment figures and order intake point to strong growth once again at the start of 2026. The Indonesian economy is also performing robustly. The outlook is significantly gloomier in Brazil, which is suffering from weak demand in the industrial sector. China continues to lag behind. Even though travel activity increased slightly during the Chinese New Year celebrations from mid-February to early March, consumer reticence still appears high and a substantial recovery is unlikely for the time being.

Growth, sentiment and trend

In percent