KOF economists sharply raise Switzerland’s growth forecast

Swiss economists have nearly doubled their 2026 growth forecast, lifting it from 0.9% to 1.7%. The upgrade marks a clear improvement in expectations for the country’s economy after a weaker outlook in June. The latest KOF Consensus Forecast, based on responses from 17 economists, puts seasonally adjusted real GDP growth at 1.7% this year and the same rate in 2027.

The survey was conducted between September 3 and 23, as economists reassessed investment, trade and domestic activity. The revision gives Swiss companies and policymakers a more constructive baseline for the months ahead, although it does not remove the risks facing an export focused economy.

KOF’s updated figures arrive as Switzerland continues to navigate shifting global trade conditions, a strong franc and uncertainty in key overseas markets. The institute’s economists also revised their expectations for foreign trade upwards, supporting the stronger overall GDP projection.

The forecast does not describe a boom. It points to steady expansion, with growth gaining support from investment and construction while inflation remains subdued. For households, employers and public authorities, the change signals a broader improvement in the economic climate and a firmer platform for planning in 2026 and 2027.

Investment has become the strongest engine behind the brighter forecast. KOF economists now expect real fixed capital formation to increase by 1.5% in 2026, compared with 0.9% in their June assessment. For 2027, they see growth of 2.2%, up from the earlier estimate of 1.8%.

The change suggests that businesses and investors may be preparing to commit more capital despite uncertain international conditions. Fixed capital formation includes spending that expands or renews productive capacity, giving the forecast particular importance for Swiss manufacturers, technology firms and service companies.

Construction is also expected to contribute more strongly. KOF raised its forecast for construction investment to 2.4% in 2026, from 1.2% in June. The estimate for 2027 increased to 1.9%, compared with the previous projection of 1.6%.

The figures cover Switzerland as a whole and do not provide a cantonal breakdown. They nevertheless point to activity in projects ranging from commercial development to infrastructure and building renewal. Stronger investment can support contractors, suppliers and skilled workers across the country, while also improving the economy’s capacity over time. The forecast remains an estimate, and the pace will depend on financing conditions, demand and confidence among Swiss companies.

Inflation is expected to remain low as growth improves. KOF economists now forecast a rise in Switzerland’s consumer price index of 0.6% in 2026, slightly below the 0.7% projection issued in June. For 2027, they expect inflation of 0.8%, down from 0.9%.

That combination of stronger output and modest price pressure could give households and businesses more stability in the near term. Lower inflation can protect purchasing power, while predictable costs help companies set wages, investment budgets and prices. The forecast does not indicate falling prices across the economy. It points to a restrained rate of increase.

The labour market outlook has changed little. KOF expects unemployment to average 3.1% in 2026 and 3% in 2027. Those figures suggest that the economic upgrade will bring continued employment resilience rather than a dramatic shift in labour market conditions.

The forecast also offers no major movement in the franc’s external value. Economists expect the currency to trade at around 0.93 francs per euro in three months and 0.92 in 12 months. Against the US dollar, they see a modest decline to 0.81 francs in three months and 0.80 in a year. For Swiss exporters, the franc’s strength remains an important factor in competitiveness.

The revised numbers still leave Switzerland exposed to international shocks. KOF’s stronger projection rests partly on improved expectations for foreign trade, yet the country remains closely tied to global demand. Swiss exporters face changing trade rules, currency movements and uneven growth among major trading partners.

The franc will remain central to that equation. A strong currency makes imported goods and components cheaper, helping to restrain inflation, but it can also reduce the price competitiveness of Swiss products abroad. KOF’s exchange rate assumptions show little change in the franc’s external value over the next year, giving exporters limited reason to expect relief from currency pressure.

Recent events have also underlined the range of risks facing the domestic economy. A heatwave in the summer of 2026 was estimated to have caused CHF 400 million in economic damage in Switzerland, according to a related report cited by Swissinfo. Weather disruptions can affect agriculture, tourism, construction and energy demand, adding uncertainty even when broad economic indicators improve.

The KOF survey does not quantify the effect of every international or climate risk. Its revised forecast provides a central scenario, not a guarantee. Stronger investment and trade could lift growth further, while weaker external demand or a renewed shock could quickly alter the picture.

Switzerland enters 2027 with a forecast of 1.7% growth, stronger investment and inflation below 1%. The figures give policymakers and companies a more favourable planning environment than they had three months earlier. They also suggest that the economy can expand without a sharp rise in consumer prices or a major deterioration in employment.

The gains will depend on whether investment plans translate into completed projects and productive capacity. Construction investment is expected to rise by 1.9% in 2027, while total fixed capital formation is forecast to grow by 2.2%. That difference shows where economists expect momentum to broaden beyond building activity.

For households, the outlook combines moderate growth with unemployment forecast at 3% next year. For businesses, stable currency expectations and stronger trade assumptions offer some support, although the franc’s level will continue to shape margins in export industries. For the federal government, cantons and municipalities, the projections provide a basis for assessing revenues, infrastructure demand and labour needs.

KOF’s September survey captures a notable shift in sentiment, from caution in June to firmer expectations in early autumn. The next forecasts will show whether that confidence survives external pressure and whether investment can sustain the improved trajectory.