- Sustained high oil prices will increase costs for many products.
- Cars, furniture, and electronics would develop into noticeably more expensive, though the strong Swiss franc will mitigate the effect.
- The KOF Institute anticipates income losses and job cuts.
- However, U.S. Tariffs still pose a greater risk to the Swiss economy.
The Swiss economy continues to grow, albeit at a slower pace than usual. Experts at the Konjunkturforschungsstelle der ETH Zürich (KOF) are now forecasting around 1% growth for 2026. This moderation is largely attributed to external uncertainties, including potential new U.S. Tariffs, geopolitical tensions, and a weakening global economic environment, all of which are weighing on the export-dependent nation.
Domestically, the picture is mixed. Private consumption remains stable, supported by low inflation and modest wage increases. However, the KOF reports that the labor market remains tight, and many companies are hesitant to invest. A notable trend in foreign trade is the continued reliance on the pharmaceutical and chemical industries, while sectors like mechanical engineering and watchmaking continue to struggle.
The KOF Institute has identified U.S. Trade policy and the conflict in Iran as the biggest political risks. The institute has modeled two scenarios regarding the Iran conflict: a base case with only short-term higher energy prices, and an alternative scenario where oil prices remain persistently around $90 per barrel. In the latter case, Switzerland’s GDP would be 0.6% lower by the conclude of 2027, with prices rising an additional 0.7% and a weaker labor market.
Alexander Rathke, Head of Economic Forecasts at the KOF, provided further details on the forecasts.
You are forecasting an oil price of $90 in this scenario. Do these figures need to be revised upwards following recent escalations – the attack on the South Pars gas field, the damaged Shell facility in Qatar, and the closure of oil and gas facilities in Abu Dhabi?
Prices could fluctuate significantly in the short term. However, the key question is whether any increase will be temporary or sustained. Our analysis therefore assumes a permanently higher price level through 2027 to assess the economic consequences. These assumptions will prove too high or too low in retrospect.
“We are assuming a price of around two Swiss francs per liter of Super gasoline.”
In this scenario, you are forecasting income losses of up to 400 Swiss francs per person and a loss of 20,000 full-time jobs. What does this look like in practice – and who will be most affected?
The losses would not be evenly distributed. The primary reason is reduced foreign demand for Swiss products. Workers in the manufacturing sector and related service industries, such as logistics companies and consulting firms, will be particularly affected, as value creation, employment, and wages will grow less strongly than in the base scenario.
Which products would become noticeably more expensive?
Imported, energy-intensive products like cars, furniture, and electronics will become more expensive due to increased production and transportation costs. However, the impact will be limited by the strength of the Swiss franc. The most significant price increases will be seen in areas where energy plays a direct role, such as transportation services and petroleum products.
How expensive could gasoline become in this scenario?
We are assuming a price of around two Swiss francs per liter of Super gasoline in this scenario.
The Iran war is not the only challenge facing the economy, but also U.S. Tariffs. Which will have the greater impact?
I currently believe that U.S. Trade policy will have a greater impact on the global economy – and therefore on Switzerland – than the conflict in Iran. This is especially true if new asymmetric tariffs are imposed that disadvantage Swiss companies compared to their competitors.
How do the economic consequences of the Iran conflict compare to those of the Ukraine war?
A key difference is energy supply: Europe has diversified its gas supply and made it much more flexible with liquefied natural gas (LNG). The initial conditions were different. Following the pandemic, a strong demand boom, supported by fiscal and monetary policy, met with limited supply. This led to a significant surge in inflation and, a prolonged period of economic weakness, particularly in Europe. This is not the case today, as we are emerging from a longer period of economic weakness.
How do higher prices influence your consumption behavior when making major purchases?
Carolin Teufelberger (cat) has been working for 20 Minuten as an editor in the News, Business & Video Reporting department since 2024.
