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IMF Executive Board Concludes 2025 Article IV Consultation with Switzerland
Washington, DC – September 16, 2025: The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Switzerland on September 10, 2025[1]
Growth is projected to gradually converge to potential by 2028, with near-term performance constrained by global trade tensions and uncertainty. Downside risks stem from a potential escalation of trade tensions, volatile energy markets, and intensified safe-haven flows that could challenge Switzerland’s export-oriented growth model. On the upside, continued discussions with the U.S. may lead to lower tariffs and higher growth.
The SNB’s policy rate cut to zero was warranted given low inflation and weakening labor market conditions. Limited space for further policy easing suggests the need to cautiously calibrate the use of available policy tools as well as to manage expectations through careful communication amid heightened uncertainty.
While the expansionary fiscal stance for 2025 is appropriate given the moderate economic slack, the confluence of demographic pressures, climate commitments, defense needs, and pension reforms necessitates a comprehensive medium-term fiscal strategy that reconciles the constraints of the debt-brake rule with mounting medium-to-long term expenditure demands.
The Credit Suisse crisis catalyzed crucial reforms to Switzerland’s Too-Big-To-Fail framework. Sustaining financial stability requires comprehensive implementation of enhanced supervisory powers, expanded macroprudential tools to address real estate risks, and a strengthened financial safety net that matches the complexity of Switzerland’s globally significant financial sector.
Preserving Switzerland’s productivity leadership requires reducing administrative barriers, enhance R&D access, and secure stable market access to maintain resilience against rising geo-economic fragmentation.
Executive Board Assessment[2]
Executive Directors commended Switzerland’s strong economic fundamentals, underpinned by robust institutions, prudent policies, and a skilled labor force, which have supported resilience and macroeconomic stability despite repeated external shocks. They however noted challenges from trade fragmentation, higher external tariffs, and safe‑haven flows. In this context, they supported continued prudent policies. Directors welcomed the authorities’ engagement with key external partners to preserve market access, noting the new agreement with the EU, and commended their continued support for multilateralism and for a rules‑based international environment.
Directors generally considered the moderately expansionary fiscal stance for 2025 appropriate. A few Directors, however, called for a more expansionary stance to help address growth challenges and deflation risks, and reduce current account surpluses. Directors highlighted the importance of maintaining flexibility within the debt‑brake to avoid procyclical fiscal tightening if adverse shocks materialize. Looking ahead, Directors noted that aging‑related spending, climate goals, and defense needs will intensify medium‑term spending pressures, requiring both expenditure‑rationalization and revenue‑mobilization measures. They welcomed ongoing tax reform efforts and saw scope to broaden the tax base. They encouraged a review of spending responsibilities across government levels.
Directors agreed that the recent monetary policy easing was warranted given economic slack and disinflationary pressures. They emphasized, however, that additional policy rate cuts below zero should carefully weigh financial stability risks, including weaker bank profitability and elevated real estate exposures. They considered that the SNB’s monetary policy framework has served the country well but could benefit from a review, including communication tools and risk scenarios, to further strengthen guidance in the current challenging environment.
Directors welcomed the 2025 FSAP findings that the financial system is resilient although noting vulnerabilities from real estate exposures and low interest rates. They welcomed the authorities’ proposed financial sector reforms which are broadly in line with FSAP recommendations. They supported swift implementation of measures to strengthen FINMA’s supervisory powers and capacity, enhance crisis preparedness, and broaden the macroprudential toolkit, and encouraged a more proactive supervisory approach. Directors encouraged continued vigilance on AML/CFT and cyber risks.
Directors noted that Switzerland’s structural competitiveness remains strong, but productivity gaps persist, particularly among smaller firms and in services, reflecting issues of access to finance, constrained R&D, a small domestic market and regulatory frictions. They encouraged continued efforts to streamline business procedures, enhance competition, and improve SME financing. Directors also welcomed reforms to the Cartel Act and Vocational Training Act and looked forward to effective implementation.
| Table 1. Switzerland: Selected Economic Indicators, 2018–30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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[1] Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
[2] At the conclusion of the discussion, the Managing Director, as Chair of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.
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