UBS analysts have projected a recovery for the Swiss economy in the upcoming year, driven by solid consumer demand and a slight decline in unemployment.
Despite a recent uptick in unemployment, the analysts anticipate that a substantial decrease in inflation will enhance consumers' purchasing power. This, in turn, is expected to stimulate domestic consumption and investment, as well as benefit exports.
The Swiss economy is also poised to gain from a modest rebound in the European economy, according to UBS. The firm notes that the Eurozone is experiencing a considerable rise in real wages, which is set to translate into increased consumer spending and broader economic recovery throughout the year.
However, UBS has identified two principal risks that could potentially undermine Swiss economic growth. One concern is the possibility that the Eurozone may not experience the forecasted recovery in 2025. Should this scenario unfold, the Swiss economy is likely to suffer a more significant downturn than currently anticipated.
The second risk involves the United States implementing blanket tariffs. Such tariffs could directly affect Swiss companies by hindering their export and investment opportunities. Moreover, these tariffs could indirectly impact the Swiss economy by impairing the Eurozone economy, which would, in turn, have a negative effect on Swiss economic growth.
UBS warns that these factors could collectively pose a downside risk to the outlook for Switzerland's economic expansion in the year ahead.
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