OECD Economic Surveys: Switzerland 2026

Executive summary

Key messages

Switzerland’s prosperous and dynamic economy has been facing turbulent times but has weathered recent shocks comparatively well. Against this background, the key messages of this Economic Survey are:

• Preserving the strong fiscal position requires additional tax revenues, especially from value added taxes, targeted spending cuts, efficiency enhancements in healthcare, and reforms for sustainable pension schemes.

• Improving the responsiveness of housing requires harmonising construction codes across cantons, streamlining construction permitting procedures, and adjusting rent regulation and housing taxation to remove disincentives to relocate.

• Investment in climate resilience could be enhanced by improving coordination across levels of government and adjusting climate insurance regulations to create incentives for prevention.

• Fostering productivity growth will entail lowering administrative burdens, closing skill shortages, lowering entry barriers and state participation in key sectors, and enhancing knowledge transfer in the innovation system.

Switzerland is at a crossroads amid rising global challenges

Switzerland is known for its stable economy and its strong track record across most policy areas. The country’s long tradition of openness for trade and finance, migrant integration, cooperation with neighbours, and strategic diplomacy has shaped one of the world’s most prosperous economies despite its small size.

Robust institutions and prudent macroeconomic management, including a successful debt brake rule, have been key to withstanding repeated shocks. Economic upturns have been used as an opportunity for fiscal consolidation, resulting in sufficient fiscal space to withstand downturns without jeopardising government finances. Switzerland has chosen to refrain from discretionary support measures for the past and current energy crises, letting its automatic stabilisers, including the short-time work compensation scheme, operate freely. It has also abstained from targeted industrial policy initiatives.

But reforms will be needed for Switzerland to remain one of the world’s most competitive and innovative economies. New tariffs on Swiss exports and severe trade disruptions have been testing export-oriented firms and sectors, and risks pertaining to key foreign markets persist (Figure 1). An ageing population, climate change, and rising geopolitical risks, are increasing long-term spending pressures, putting public debt sustainability at risk.

Figure 1. The economy has been more resilient than peers

Real GDP

Note: EU peers is the unweighted average of Germany, Austria, Luxembourg, France, Belgium, the Netherlands; Nordics is the unweighted average of Iceland, Finland, Norway, Sweden, and Denmark. Averages for 2026Q2 include only countries with available data on 3/9/2026.

Source: OECD Economic Outlook: Statistics and Projections (database).

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The coming years will be decisive with major decisions and popular ballots that could significantly shape future policies. One main challenge will be to stabilise and strengthen ties with European neighbours while preserving access to the European single market. Important decisions on capital rules, banking regulation, supervision and crisis management are coming up to strengthen the stability of the banking sector without denting Switzerland’s attractiveness as a major international financial centre. Despite a solid fiscal position today, reforms will also need to bolster long-term fiscal sustainability, and some of these reforms could face low public acceptance.

Growth has been below potential, and the outlook is subject to uncertainties

Real GDP is projected to grow by 2% in 2026 and by 1.4% in 2027. Domestic demand will remain the main driver of growth as higher energy prices and the uncertain environment weigh on global demand. Inflation will remain low, partly thanks to the economy’s low energy-intensity.

The economy has been affected by a changing trade landscape and geopolitical uncertainty. Growth was subdued in 2025 amid uncertainty weighing on exports and investment, but it is expected to gain momentum in 2026 (Table 1).

Reliance on a few sectors and trade partners adds to vulnerabilities and risks. Manufacturing other than chemicals and pharmaceuticals has barely grown in the last years (Figure 2). Higher tariffs on pharmaceuticals or more difficult access to the European single market are some of the main downside risks to the outlook.

Inflationary pressures have been low and are expected to remain so, despite higher energy prices. The Swiss franc has been trading at high levels, mostly driven by safe-haven inflows, and the economy’s low energy-intensity limits direct exposure to international energy supply shocks. Monetary policy should remain accommodative to preserve price stability and support the economy.

The labour market remains resilient, with pressures easing. Employment growth has been subdued, resulting in a fall in the job vacancy rate. Yet, nominal and real wage growth remain solid, helping to sustain household purchasing power.

Financial risks appear contained, but recent events suggest closing some remaining gaps in banking regulation, supervision and crisis management. Welcome revisions to the “Too Big To Fail” framework are underway, including a move towards stricter capital backing of participations in foreign subsidiaries.

Figure 2. Growth increasingly relies on key sectors of the economy

Note: All variables are seasonally and calendar adjusted, and at constant values.

Source: SECO; OECD Economic Outlook: Statistics and Projections (database).

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Table 1. Growth has been subdued but is expected to gather momentum

Annual growth rates, %, unless specified

	2024	2025	2026	2027
Gross domestic product (GDP)	1.5	1.6	2.0	1.4
Unemployment rate	4.3	4.8	4.8	4.3
Consumer price index	1.1	0.2	0.6	0.6
General government fiscal balance (% of GDP)	0.5	0.7	0.3	0.0

Note: GDP is not adjusted for sporting events.

Source: OECD Economic Outlook 119 database and OECD projections.

Reforms are needed to safeguard public finances in the long-term

The fiscal position is strong, but the near-term fiscal outlook is subject to uncertainty as some proposed measures to maintain compliance with the federal debt-brake rule require popular approval. Moreover, spending pressures are mounting, requiring ambitious reforms to preserve long-term debt sustainability.

Compliance with the debt brake rule in the next few years will require additional sources of revenue and well-targeted spending cuts. The government is aiming at a mix of revenue and spending measures to achieve a balanced budget between 2027 and 2029. The financing of the recently approved 13^th monthly pension payment in the public pay-as-you-go system remains uncertain.

On the revenue side, proposed plans include an increase in the VAT rate to finance rising pension costs and higher defence spending and will require approval through a popular ballot. Switzerland’s low VAT rate in international comparison points to room for such increases. However, expected revenues from the proposed rate increase fall short of what is needed to cover this additional expense.

On the spending side, parliament adopted the “relief package 27”, expected to reduce annual public spending growth by 0.2-0.25% of GDP from 2027 onwards. Broad-based cuts run the risk of affecting effective programmes and could be avoided. Regular public spending reviews that go beyond subsidies and have a systematic link to the annual budget would help preserve effective priority initiatives.

Beyond 2029, additional reforms are needed to ensure public debt sustainability. As expenditure on old-age pensions rises faster than receipts, the public pay-as-you-go system is expected to start posting deficits that could reach about 0.4% of GDP by 2035. Increases in healthcare spending will put further strains on public finances, especially at the cantonal level.

Healthcare spending pressures can be addressed by seeking efficiency gains. Better coordination among cantons in hospital planning could reduce capacity overlaps across cantonal borders. Stronger use of managed-care models could facilitate information sharing among practitioners and provide incentives to avoid over-consultation. A nationwide patient data exchange platform would further improve care continuity and reduce duplication of services. A rapid diffusion and widespread use of electronic health records, telemedicine and artificial intelligence offer opportunities to improve cost-efficiency.

A more ambitious pension reform will be key to ensure long-term fiscal sustainability. An outline of an old-age pension reform is under preparation, aiming to encourage working beyond the reference retirement age of 65 years, which is below that of most OECD countries. Linking the retirement age to gains in life expectancy would be an effective way to ensure long-term fiscal sustainability.

Rising housing costs call for strengthening housing supply responsiveness

Finding an affordable dwelling in cities and tourist destinations has been increasingly challenging, as housing supply has failed to keep up with demand. Regulatory hurdles for construction and adverse incentives resulting from rental regulations and housing taxation will need to be tackled to strengthen supply responsiveness.

Increasing housing supply responsiveness will require reducing uncertainties related to land-use planning. Not all municipalities have adapted their land use plans to the Revised Spatial Planning Act and uncertainty discourages new housing construction. Further federal support to cantons and municipalities could promote a swifter implementation of the new Act.

Construction costs are high compared to other countries. Building standards and construction laws vary across cantons. Such heterogeneity limits competition and reduces the scope for economies of scale. Construction permit procedures are highly complex in some cantons and could be expedited through a more widespread use of electronic processing and digital solutions to process information and data. More harmonisation of building codes across cantons would reduce costs in the construction sector.

Limits to rent adjustments in existing contracts may have exacerbated housing shortages. Market rents for new contracts have increased much faster than regulated rents for existing leases. The resulting lock-in effects contribute to increased floor-space consumption per capita. Adjustments to rent regulations could be considered to better reflect market developments.

There is scope to improve the optimal use and allocation of the available stock of housing and buildable land through taxation. Revenues from recurrent taxes on immovable property are low in international comparison and could be bolstered by updating property valuations more frequently and basing them on recent sales or rent data for similar properties. The land-value incremental tax could become more effective if valuation methods were clarified and harmonised across cantons. Its realm of mandatory application could be extended beyond new zoning towards cases of rezoning and upzoning.

Containing the economic, social and fiscal costs from climate change

Climate change is calling for coherent adaptation and mitigation measures to contain its economic, social and fiscal costs (Figure 3). Policies should focus on improving coordination across levels of government and incentivising investment in preventive measures through better economic instruments.

Coordination between levels of government on climate adaptation can be improved. Cantons have discretion on implementing adaptation measures, leading to heterogeneous progress. Introducing a formal and systematic coordination mechanism would increase coherence and mainstream adaptation in cantonal structure plans.

Information gaps about climate risks persist. The use of hazard maps is still limited and there is no legal obligation for hazard risk disclosure in property transactions. Introducing disclosure requirements about climate risks in property transactions would increase the positive impact of hazard maps.

Climate adaptation should be mainstreamed into standards and regulations. Keeping building and construction standards aligned with modern requirements can strengthen resilience to more frequent climate hazards.

Climate hazard insurance has been performing well so far. However, a rising frequency of hazard events and their clustered nature could threaten the stability of the system. Insurers could be allowed to grant premium discounts for investments in adaptation measures. Regulated insurance premiums could also become more responsive to forward-looking risk indicators.

Figure 3. Switzerland is feeling the effects of global warming

Temperature change on land

Note: Temperature change with respect to a baseline climatology, corresponding to the period 1951–1980. Series are centred three-year averages.

Source: FAO Stat with data from the National Aeronautics and Space Administration Goddard Institute for Space Studies (NASA-GISS).

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Boosting broad-based productivity growth

Switzerland’s productivity growth has come mostly from a few export-oriented industries. Diffusing productivity growth more broadly will require increasing competition in key sectors, reducing administrative burdens, closing skill shortages, and providing tools to enhance knowledge transfer to lagging firms.

Barriers to competition in network sectors like energy are higher than the OECD average, while regional monopolies continue to dominate retail electricity markets. Stronger competition in electricity markets should be promoted, including through the new electricity agreement with the European Union (EU).

Lowering entry barriers and state involvement in some sectors can foster productivity spillovers. Reducing non-tariff barriers is key to safeguard competitiveness. Strengthening the effective separation between the Competition Commission and its Secretariat can increase the transparency and legitimacy of the institution.

Costly administrative burdens hinder business creation and innovation (Figure 4). Further streamlining administrative processes could involve applying silence-is-consent and risk-proportionality principles, reducing data requirements, and increasing the coverage of e-government services.

Switzerland can strengthen its leading position in innovation. Establishing more regulatory sandboxes, introducing model agreements for regulation of intellectual property, and centralising data on research activity can enhance knowledge and technology transfers between stakeholders.

Closing skills shortages can strengthen productivity growth. Wider access to childcare and more flexible adult learning can foster the labour-market integration of women, senior workers and skilled workers with migrant backgrounds.

Administrative hurdles hamper infrastructure deployment. Differences in regulations delay projects spanning across subnational jurisdictions. Using more time-bound approvals, increasing coordination in planning and further harmonising environmental requirements can accelerate progress on productivity-enhancing infrastructure.

Gaps remain in integrity legislation in the private sector. Enacting a code of conduct for lobbying, creating a register of lobbyists, and introducing explicit protections for whistleblowers in the private sector can strengthen governance and promote fairer competition.

Figure 4. The cost of regulation for firms has increased

Change in regulatory costs for businesses, 2012-2023

Note: Change in the share of employment devoted to regulatory tasks.

Source: OECD calculations based on Andrews, Turban and Tyros (2026),”Regulatory compliance costs and productivity: New task-based evidence”.

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MAIN FINDINGS	KEY RECOMMENDATIONS
Navigate through uncertainty
Inflationary pressures remain low, in part due to the significant appreciation of the Swiss franc, which has also affected exports growth.	Maintain an accommodative monetary policy stance until the economic recovery is well underway.
Evidence from a recent bank failure suggest that standalone capital ratios of parent banks may hide vulnerabilities from foreign subsidiaries.	Require G-SIB parent banks to fully capitalise participations in foreign subsidiaries with CET1 capital.
Fiscal policy has been broadly neutral, coherent with a closing output gap and letting automatic stabilisers operate.	Maintain the neutral fiscal stance and compliance with fiscal rules.
Medium-term compliance with the debt-brake rule will require additional fiscal adjustment, including on the revenue side.	Mobilise additional tax revenues through increases in the standard VAT rate beyond what is currently planned.
Improvements in public spending efficiency present an opportunity to avoid cuts in successful and growth-enhancing programmes.	Expand the scope of regular public subsidy reviews to all public spending, systematically integrating the process with annual budgeting procedures.
Planning of healthcare capacity is undertaken at the cantonal level, but coordination among cantons is often difficult.	Enhance healthcare spending efficiency by regulating the planning of hospital and medical services at the supra-regional level.
Simulations from the Federal Social Insurance Office show that the public pays-as-you-go system will post deficit as early as 2026. The deficit is expected to grow even further, reaching about 0.4% of GDP in 2035.	Link future increases in the retirement age to life expectancy gains.
Exports account for 78% of GDP. The EU accounts almost 40% of total Swiss goods exports and the US accounts for more than 20%.	Strengthen ties with key trading partners through new agreements and continue to seek new trade partnerships to expand potential markets.
Improving the responsiveness of housing supply
Densification can generate economic, environmental and social benefits, but often faces local opposition.	Promote further densification, including through opportunities for public participation at all stages of the planning process, increasing the share of mixed-use zoning, and implementing tools for balancing competing interests.
Construction permitting procedures are extremely complex in some cantons, leading to long delays of up to almost 500 days.	Accelerate building permits by expanding the use of electronic processing and developing AI solutions to assess compliance with local zoning and building codes.
Regulation limiting rent increases for sitting tenants hinder residential mobility and the optimal use of the housing stock available for rental.	Allow rents in on-going and new contracts to be adjusted equally based on local average rents for new leases.
The share of under-occupied dwellings is high, especially among older and wealthier households. Recurrent taxes on immovable property create little incentives for renting out.	Require yearly updates of property valuations based on market data for the assessment of property taxes.
Adapting to climate change
Coordination between central and local governments to align spatial planning with climate adaptation plans is incomplete. Participation in the voluntary Swiss Spatial Concept remains incomplete.	Introduce a formal and systematic coordination mechanism to ensure coherence between spatial planning and adaptation needs.
Regulated insurance premiums do not reflect differences in individual hazard risks, including those resulting from investments into hazard prevention.	Allow insurers to grant premium discounts for investments into effective adaptation measures.
A one-off increase in the CO2 levy has been rejected by popular vote in 2021 and the tax remained unchanged since.	Progressively replace the current CO2 levy with an enhanced strengthened Emissions Trading Scheme, including the buildings and transport sector, and without any caps on permit prices.
Unlocking broad-based productivity growth
Regional monopolies continue to dominate retail electricity markets and are subject to price controls. Only large consumers can freely choose their retail electricity or gas supplier.	Promote competition in the electricity market, including through the new electricity agreement with the European Union.
Although the Corporate Relief Act has helped streamline regulation, entrepreneurs still face administrative hurdles to start a business.	Implement the silence-is-consent principle for licensing low-risk activities and ensure that license requirements are proportional to risks.
Despite a unilateral abolition of industrial tariffs and an ongoing customs reform, non-tariff trade barriers continue to hamper international trade in some specific areas.	Review existing non-tariff barriers to trade and reconsider those that do not serve a clear public-interest objective.
The regulatory framework for transparency in lobbying is weak.	Enact a code of conduct and create a register for lobbyists.