KOF raises Swiss growth forecast to 1.9 per cent for 2026

Switzerland’s economy is expected to grow by 1.9 per cent in 2026, up from the 0.8 per cent forecast in summer, according to KOF, an economic research institute, in figures reported by SRF. The estimate excludes the effect of international sporting events.

KOF said strong pharmaceutical exports and investment had helped lift its outlook. Goods exports rose sharply from April to June, driven particularly by pharmaceutical products. Private consumption and construction and equipment investment also increased.

The institute forecasts growth of 1.7 per cent in both 2027 and 2028. KOF director Jan-Egbert Sturm said the second quarter had performed surprisingly well and that revised earlier data also pointed to greater growth potential.

KOF expects employment to increase by 1.5 per cent in 2026, compared with its previous forecast of 0.5 per cent. However, it expects only modest job creation in the second half of the year. Unemployment is forecast to remain at 3.1 per cent in 2026 and 2027, before easing to 3.0 per cent in 2028. Sturm said artificial intelligence was likely one factor behind persistent unemployment, with highly qualified workers in roles vulnerable to AI affected more often than average.

Nominal wage growth is expected to slow through 2027, while real wages could rise slightly. KOF forecasts inflation of 0.6 per cent this year and next.

The institute said risks to the outlook include further escalation of conflicts in the Middle East, US tariff policy and rising bond yields. A worsening of Middle East conflicts could disrupt energy supplies and prolong the energy price shock. New US tariffs or weaker growth in key export markets could also weigh on Swiss exporters. KOF said the outlook could improve if the Iran war eases, European investment programmes are implemented faster than expected, or investment in AI boosts the Swiss economy.