Switzerland: 2024 Article IV Consultation-Press Release; Staff Report; Informational Annex; and Statement by the Executive Director for Switzerland

The 2024 Article IV Consultation discusses that growth is recovering gradually after slowing in 2023 in Switzerland. In order to counter risks of inflation moving to and settling at very low rates, the rate cut ahead of other central banks was appropriate. Going forward, monetary policy should remain responsive to incoming data, while taking into account international monetary policy developments. Banks have strong buffers, but vulnerabilities related to real estate persist. Ample capital buffers should be maintained, the macroprudential toolkit expanded, supply-side actions to stem pressure on the residential housing market advanced and data gaps closed. The authorities should continue to promote labor market and pension reforms to incentivize labor force participation of women, older workers, and immigrants and address labor shortages, skills gaps, and potential fiscal imbalances. The revised CO2 Act clarifies the policy framework for 2025–2030 but is less ambitious than initially proposed and might require acquiring more emissions-reduction credits from internationally. Advancing negotiations with the EU and enhancing cooperation with other key partners would mitigate uncertainty and strengthen resilience against geo-economic fragmentation risks.