Switzerland's economy contracted by 0.5% quarter-on-quarter in the third quarter of 2025, reversing the 0.1% growth recorded in the previous three-month period, flash estimates showed. It marked the first economic contraction since the second quarter of 2023, reflecting the significant strain imposed by the 39% US tariff introduced in early August that heavily impacted the export-oriented economy. With officials securing a trade agreement last week that reduces the tariff to 15%, pressure on key Swiss export industries is expected to ease and raises the prospect of a rebound in the coming quarters. The contraction was driven largely by a steep decline in value added within the chemical and pharmaceutical sector, while the industrial sector overall also posted negative growth. Moreover, the services sector expanded at a slower-than-average pace.