In Q2 2025, Swiss GDP increased by 0.1%, while the services sector stabilized despite declines in the industrial sector.
by VT Markets
/
Aug 15, 2025
Switzerland’s GDP growth for the second quarter of 2025 is estimated to be only 0.1%. This is a drop from the 0.8% growth seen in the previous quarter.
The services sector is doing well, but the industrial sector is struggling.
Swiss Economy Slows Down
The +0.1% GDP figure for Q2 highlights a major slowdown in the Swiss economy, following a better start to 2025. This significant drop, mainly due to the shrinking industrial sector, shows that the economy may be in a more vulnerable state than expected. As a result, the Swiss National Bank (SNB) is likely to pause any interest rate increases.
This economic weakness leaves the Swiss franc (CHF) at risk, especially against the euro and the dollar. Recent data from July 2025 shows Swiss inflation has eased to 1.6%, which is well within the SNB’s target range. This situation gives the central bank little reason to support the currency. Investors might want to consider options for a weaker franc, such as buying EUR/CHF calls in the coming weeks.
The struggles in the industrial sector are also bad news for the Swiss Market Index (SMI). Recent data shows industrial production fell by 0.4% in June 2025, confirming the downturn. Therefore, buying protective put options on the SMI or on related exchange-traded funds could be a wise way to protect against a possible decline in Swiss stocks.
Uncertain Economic Environment
This slowing growth creates uncertainty, often leading to higher market volatility. History shows how quickly the SNB can change its policy, similar to the sudden rate cuts during the European debt crisis over a decade ago. This suggests that preparing for a larger market move, potentially through straddle option strategies on the CHF, could be a smart approach.
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by VT Markets
Aug 15, 2025
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