KOF revises its growth estimates upward for 2026 and 2027

Context

In brief

• GDP 2026 at 1,9%, versus 0,8% estimated in mid-June
• GDP 2027 at 1,7%; 1,7% still forecast for 2028
• Employment 2026 at 1,5%; unemployment at 3,1%
• Key rate expected at 0,25% in December

Key facts

• Institute → KOF, Swiss Federal Institute of Technology Zurich
• GDP 2026 → 1,9% excluding sporting events; 0,8% estimated in mid-June
• GDP 2027 → 1,7%, versus 1,5% estimated previously
• GDP 2028 → 1,7%
• Employment 2026 → 1,5%
• Unemployment → 3,1% in 2026 and 2027; 3% in 2028, indicated as 3,0%
• Prices → 0,6% in 2026 and 2027; 0,5% in 2028
• Key rate → 0,25% after the increase expected in December

The revision of the estimates

In the first half of the year, the Swiss economy proved more dynamic than expected. KOF, the institute of the Swiss Federal Institute of Technology Zurich, has therefore revised its growth estimates sharply upwards. The update was reported by Keystone-ATS.

GDP excluding sporting events will grow by 1,9% in 2026, versus 0,8% forecast in mid-June. For 2027, expected growth is 1,7%, that is, 0,2 percentage points above the 1,5% previously indicated. For 2028, the institute offers an initial forecast of 1,7%.

Despite pressure from American trade policy and rising energy prices, the global economy has so far proved resilient. Switzerland also delivered a favorable result: the second quarter brought positive surprises, with export growth concentrated mainly in the pharmaceutical sector.

The expected trajectory will not, however, be uniform. In the third quarter, KOF expects a temporary setback, followed by moderate growth in the fourth quarter of the year. Developments in Germany and the rest of Europe should support the recovery.

The upward revision of the estimates does not erase the pressures already observed: KOF continues to factor both American trade policy and energy into its outlook, while linking the year-end strengthening to the European recovery. The picture therefore remains nuanced, between the positive surprise in the second quarter and the pause expected in the third.

In the labor market, employment should increase by 1,5% in 2026. The unemployment rate is estimated at 3,1% and should remain unchanged in 2027, before falling slightly to 3% in 2028, a figure indicated in the forecast as 3,0%.

Nominal wage growth will continue to slow through 2027. However, contained inflation should allow for slight increases in real earnings. KOF estimates price growth at 0,6% in 2026 and 2027, and then 0,5% in 2028.

For the monetary policy assessment scheduled for December, the Zurich-based institute forecasts a 25-basis-point increase in the key rate, to 0,25%. After that intervention, the rate should remain unchanged for the rest of the forecast horizon.

Operational details

Three practical readings

For those who live or work in Switzerland, the KOF revision is a trajectory to use for planning, not an outcome already secured. The more favorable annual figure coexists with the expected setback in the third quarter: the sequence of the year matters when assessing employment, wages and expenses.

The first channel is employment. The expected increase in employment in 2026 and the unemployment indicated for 2026 and 2027 describe a picture that KOF still considers resilient, but not uniform. The expected decline in the share of unemployed people in 2028 comes after a year of stability; the practical message is to distinguish annual improvement from when it materializes.

The second channel concerns remuneration. Nominal wages should slow through 2027, while contained inflation should lead to slight increases in real compensation. For costo della vita in Svizzera, therefore, the reading should be made by considering wages and price growth side by side, without confusing a national forecast with the spending of every individual person.

| Indicator | 2026 | 2027 | 2028 | | Price growth | 0,6% | 0,6% | 0,5% | | Unemployment rate | 3,1% | 3,1% | 3% |

The table shows two parallel trends: prices with contained growth and a labor market showing slight improvement only in the final year of the indicated horizon. It is not a promise of individual income, but a reference for interpreting changes from one year to the next.

The third channel is external. The expansion of exports in the second quarter, especially in pharmaceuticals, supports the Swiss picture; pressure from American trade policy and energy pressures nevertheless remain. The recovery of Germany and the rest of Europe is indicated as supporting growth in the fourth part of the year.

Monetary policy also enters the planning, but with a precise step: the assessment scheduled for December. KOF anticipates an increase in the policy rate and then an unchanged parameter for the rest of the horizon. For the reader, this means following the December review separately from the data on prices, wages and employment.

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Key points

A four-step process

To turn the estimates into concrete monitoring, it is useful to create a sheet updated with each new indication, without adding figures unrelated to those from KOF.

1. Separate the time horizons. Create three distinct rows for 2026, 2027 and 2028. In each, pair GDP growth, employment, unemployment and prices, so as not to mix forecasts for different years.

2. Record employment. Keep the employment figure and the unemployment trajectory separate. Those monitoring the job market can supplement the macro picture by consulting annunci di lavoro, without treating a national estimate as a guarantee for every sector.

3. Distinguish nominal and real. In the sheet, record the expected slowdown in nominal wages through 2027 and, on a separate line, the slight expected increases in real compensation. The comparison prevents reading wage trends without considering price growth.

4. Mark December as a checkpoint. KOF expects the key rate to increase by 25 basis points by then, to 0,25%, followed by stability for the rest of the forecast horizon. After the assessment, the figure can be compared with the initial forecast.

During this review, it is also advisable to keep an eye on the factors indicated by KOF: the recovery in Germany and the rest of Europe, the performance of pharmaceutical exports, and the pressures related to US tariff policy and energy prices. These are factors to monitor together, not items to add automatically to one's personal budget.

The final step is to compare the macroeconomic indications with your own situation, keeping forecasts for the country separate from individual decisions. To translate the wage guidance into your own situation, use calcolatore stipendio.

Source: swissinfo.ch