Swiss government slashes economic outlook for 2026 as tariffs set in

ZURICH, Oct 16 (Reuters) - The Swiss government cut its 2026 economic growth forecast on Thursday, saying the U.S. tariffs were additional burdens on exporters and the nation's broader economy.

It now expects 0.9% economic growth in 2026, below the 1.2% growth forecast in June, while maintaining its 1.3% projection for 2025. The forecasts mean the Swiss economy is expected to continue growing below its long-term average rate of 1.8%.

Switzerland is struggling to adapt to the 39% import duties imposed by Washington in August, among the steepest charges under President Donald Trump's trade policy reset.

The forecasts are adjusted for the impact of sporting events.

"The additional tariffs are placing a heavy burden on affected sectors and export-oriented companies, with significant ripple effects expected across the broader economy," said the State Secretariat for Economic Affairs, which had already cut its previous predictions in June.

Unemployment, meanwhile, is expected to rise, SECO said, maintaining its forecasts for a rate of 2.9% in 2025 and 3.2% in 2026.

Inflation is projected slightly higher at 0.2% in 2025 and 0.5% in 2026, compared with the 0.1% and 0.5% expected in June, respectively.

The Swiss National Bank last month also lowered its economic outlook because of tariffs, forecasting next year's economic growth at just under 1% for 2026, down from its previous 1% to 1.5% forecast.

The central bank said the Swiss watchmaking and machinery sectors were particularly hit by tariffs, while the service sector was less affected.

Swiss companies have already reported first effects of the tariffs that were reducing access to one of their biggest markets.

A poll by Swissmechanic, which represents small and medium-sized industrial companies, recently showed that 45% of them had already seen a drop in orders since the U.S. tariffs were imposed in August.