EMR September 2026
Dear Reader
The publication of Swiss economic activity for the second quarter of 2026 requires a closer look, beyond the first public comments such as “The Swiss economy is buzzing” (see Neue Zürcher Zeitung, 13. August 2026, p. 25). Does the rather[AZ1] positive initial assessment mean a positive outlook? Or does history speak of a somehow more modest result, as implicitly shown by the following developments in Swiss GDP in recent years?
| Year | GDP nominal (Bio. CHF) | Real Growth |
| 2015 | 660 | +1,3% |
| 2017 | 694 | +1,6% |
| 2019 | 727 | +1,2% |
| 2020 | 706 | -2,4% |
| 2021 | 740 | +4,2% |
| 2022 | 771 | +2,7% |
| 2023 | 788 | +0,7% |
| 2024 | 805 | +1,5% |
| 2025 | 818 | +1,3%. |
The correction in 2020 due to the pandemic (real growth -2.4%) was strong by Swiss standards, but was quickly recouped. In 2023, the slowdown in the European economy was reduced to just 0,7%. Since then, the situation has somewhat stabilized.
Comparing GDP per head in 2025 (USD according to PPP, purchasing power parity) as an indicator, we find the following indications for
| GDP per capita | |
|---|---|
| Luxemburg | 135’000 |
| Irland | 112’000 |
| Switzerland | 87’400 |
| Norway | 82’100 |
| USA | 80’200 |
| Denmark | 73’500 |
| Germany | 58’900 |
| France | 52’800 |
In terms of purchasing power parity (PPP), Switzerland ranks third – behind Luxembourg (financial center effect) and Ireland (tax residency effect), which skews the numbers a lot. However, in nominal USD, Switzerland ranks 1st due to the strong Swiss franc.
Fact is that, according to the industry structure, the Swiss economy is strongly service-oriented.
| BIP-Proportion | Employees | |
| Financial Services | 9,4% | 214’000 |
| Pharmaceuticals & Chemicals | 7,8% | 76’000 |
| Trade | 11,2% | 632’000 |
| Health and Social Affairs | 7,1% | 620’000 |
| Machinery/Electrical/Metal | 6,8% | 318’000 |
| Information & Communication | 5,1% | 186’000 |
| Public Administration | 4,6% | 192’000 |
| Construction | 5,3% | 328’000 |
| Agriculture | 0,7% | 150’000 |
PRODUCTIVITY MATTERS
Recently, economists, politicians, business leaders, and even a growing number of citizens have recognized the link between productivity, inflation, and economic growth. The commonly used definition of productivity is “production per hour worked,” although more recently there has been increasing attention to measures of energy production and, increasingly, to capital productivity.
Simply put, if an employer currently produces 120 units of a product, compared to 100 the previous year, their productivity has increased by 20%. If the employee receives a 20% pay increase while production increases by 20%, there is theoretically no impact on inflation.
Two other factors determine the trajectory of inflation, although, strangely enough, they do not receive the same attention. In particular, it is about energy productivity and capital productivity. At this intersection, we believe that analysts are challenged as they are increasingly driven by economic problems other than inflation.
Readers might wonder what those other economic factors are. Here’s our answer:
- output per hour of work.
- Energy productivity and/or
- Capital productivity?
Our contextual question to the reader is: In this context, what factor do you consider to be the most deterministic regarding economic activity? We are sure that the vast majority of readers rely on “OUTPUT PER MAN-HOUR”. Correct, as a superficial first answer. A relevant study of recent developments has drawn the attention of economists and, increasingly, business leaders and politicians to the relationship between productivity, inflation and economic activity! In other words, entrepreneurs and the general public have discovered that labor costs per unit of output are no longer the primary promising approach they were used to assume. Technological change and product innovation do increasingly matter.
Productivity growth is currently one of the most challenging economic problems. One of the biggest decision-making errors concerns the incorrect assumption of relatively comparable productivity rates from country to country, mainly as a result of policy-driven arguments. What is clear is that there is no doubt that technological innovation is or can be significant, and varies from country to country. It is insufficient to measure production mainly in terms of working hours – just think of the rise in the price of crude oil and coherent currency adjustments.
HOW TO BENEFIT IN A CHANGING ENVIRONMENT?
From an investment perspective, we make the following assumptions:
- Short- to medium-term inflation will be higher than preliminarily expected.
- While economic growth could be significantly lower.
This requires a continuous assessment from country to country, as well as the currencies in which one wants to invest.
NEVERTHELESS, WE EXPECT SHORT- TO MEDIUM-TERM INFLATION TO BE HIGHER AND ECONOMIC GROWTH TO BE SIGNIFICANTLY LOWER, WHICH WILL REQUIRE A CONTINUOUS ASSESSMENT OF STOCK, BOND AND CURRENCY SELECTION.
One specific factor that will determine investment policy in the coming months is the expected weightings that policymakers and investors in general will place on the three factors mentioned to determine productivity. That is, Productivity in general, defined by hours worked, or by energy productivity, or by capital productivity.
We would appreciate knowing which order you think is the most promising. Thank you in advance for your specific statement.
