Global economy loses momentum in the face of risks

(CONNECT) The global economy stabilized last year, growing by 2.8 per cent, but a slowdown is forecast for 2026, according to the credit insurer and risk manager Coface. Growth is expected to be slightly lower at around 2.6 per cent in 2026. The Coface Risk Review for February 2026 highlights a high degree of uncertainty and, in some cases, extreme risks. Macroeconomically, there is a danger of further trade barriers and conflicts, it writes. Meanwhile, social and political risks lurk in the fact that in many places, the population is affected by the consequences of these developments.

Against this backdrop, international companies benefited in 2025 from effects that are unlikely to materialize in the current year, including massive monetary easing and strong demand for US imports prior to new tariffs coming into force. Precisely the latter will be lacking in China in 2026. In addition, tariff pass through, or the effect on final prices, is still largely pending in the US. Companies are already feeling the consequences: business insolvencies in the US increased by 15 per cent in the second half of 2025.

Switzerland is successfully facing the challenges, according to the analysis, as reflected in its Coface country rating of A1. With this, Switzerland remains alongside Denmark, Luxembourg and Norway as part of the group of countries with the lowest risk worldwide. Sector-wise, it outperforms its European neighbors – despite the fact that the automotive and metal sectors are rated as very high risk and the chemical and construction sectors as high risk. The growth forecast for Switzerland is 1.0 per cent. “While this is not good in a historic comparison, it is in line with regional averages,” writes Markus Kuger, Coface's chief economist for the DACH region. 

Germany and the eurozone as a whole are expected to grow by 1.0 per cent, thereby representing stability. According to Coface, two countries are performing particularly well: Poland rose from A4 to A3 in the risk assessment, and Sweden from A3 to A2. 

After years of sluggish growth, Germany is reportedly showing signs of improvement. “Germany’s trading partners will benefit from the immense domestic fiscal stimulus package over the next years,” emphasizes Markus Kuger. The government’s 2026 budget includes total public investment of 127 billion euros. Also, in 2026, the defense budget will total 108 billion euros, 22 billion euros more than in the previous year. Kuger says that these order volumes cannot be served without European producers, representing great opportunities for Switzerland as a high-tech country.

According to Coface, developments in China – the third most important market for Swiss goods – are the main driver of the slowdown in global growth. Among other things, the Chinese economy is suffering from lower domestic demand and investment momentum, which is expected to cause its growth to fall by 0.6 per cent to 4.4 per cent in 2026. Swiss exports to China declined by 8 per cent in 2024, highlights Markus Kuger.

During the same period, exports to India surged by 32 per cent. Currently, China is Switzerland's third most important partner, India is the eighth. The outlook is slightly dulled by the slowdown in Indian growth to 6.1 per cent. But the free trade agreement between Switzerland and India, which was signed in 2024, will help support export growth in the long term, adds Kuger.

Coface has been supporting Swiss companies in their international development since 1995. It has offices in Zurich and Lausanne. Its latest economic studies and risk insights are available here. ce/yvh