Vaud economy between recovery and uncertainty

February 2025

After two years of weak growth, economic experts are forecasting an economic recovery for the canton of Vaud. The Vaud Economic Commission expects gross domestic product to grow by 1.8% in 2025 and to increase to 1.9% in the following year. Nevertheless, global uncertainties are clouding the outlook. The economic and trade policies of major economies as well as geopolitical tensions and currency policy developments remain unpredictable factors.

Global economic tensions have increased in recent months. The OECD and the Swiss State Secretariat for Economic Affairs (SECO) point to risks, particularly from the new US administration and the unclear relations between Switzerland and the EU. While the US economy is growing more strongly than expected, the European economy remains weakened by structural challenges. The strong Swiss franc is slowing down export-orientated sectors, while domestic demand remains a stable pillar of the economy.

Construction industry benefits from interest rate cuts
The Swiss National Bank (SNB) has eased its monetary policy and lowered the key interest rate from 1.75% to 0.5%. This measure is creating a favourable investment climate, particularly in the construction industry, which is benefiting from falling financing costs. Forecasts for Switzerland as a whole predict growth of 1.5% this year and an acceleration to 1.7% next year.

Sector development mixed picture
While the industrial economy continues to be challenged, other sectors are showing mixed developments. The retail and hospitality sectors are struggling with a weak business climate, while the service sector is showing positive momentum. Particularly strong growth is forecast for the chemical and pharmaceutical industries, business services and the financial sector. The machinery and watchmaking industry could also benefit from the economic recovery in the medium term.

Stabilisation with uncertainties
The Vaud economy is looking forward to a year of opportunities, but also challenges. While key sectors are likely to benefit from a sustained recovery, geopolitical and currency policy uncertainties remain risk factors. The decisive factors will be how international trade relations and the domestic economy develop and the extent to which companies are able to react flexibly to changes.

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