Cyclical shocks and a low-interest-rate: the challenges facing the Swiss economy

In an environment characterised by economic uncertainty and persistently low bond yields, diversification is essential within pension strategies. We explore this with Marie Thibout, Economist, and Laurent Neri, Wealth Planner at Mirabaud, a Geneva-based private bank that has recently opened a branch in Lausanne, where these investment and pension issues lie at the heart of its expertise.

The ceasefire in the Middle East has brought a welcome respite, but it does not dispel the uncertainties surrounding global energy supplies. Geopolitical tensions continue to weigh heavily. Against this backdrop, Switzerland appears relatively resilient. Its energy mix, which is less dependent on gas than that of its European neighbours, mitigates the direct impact of rising energy prices. However, the indirect effects should not be underestimated: appreciation of the franc as a safe-haven currency, economic slowdown in Europe and increased pressure on exports. The central scenario remains one of moderate growth for 2026, but risks have intensified. A combination of weak growth and persistent inflation – in other words, a stagflationary environment – cannot be ruled out. Whilst the resilience observed at the start of the year is encouraging, growth of less than 1% remains plausible in the event of prolonged tensions.

Inflation under control, status quo expected for the SNB

A return to negative interest rates in Switzerland now seems unlikely. Rising energy prices have reignited inflationary pressures, which were already evident in business confidence indicators and recent data. Nevertheless, the situation remains under control. Inflation remains moderate and well below the levels seen in 2022, largely thanks to the strength of the franc. Against this backdrop, the Swiss National Bank retains room for manoeuvre and is unlikely to rush into monetary tightening. Future developments will depend primarily on energy dynamics.

Bond markets: yields likely to remain subdued

Globally, the rise in yields since the start of the year has taken place against a backdrop of volatility, upward revisions to inflation expectations and more cautious communication from central banks. In Switzerland, this trend has been more moderate than in the major developed economies. Inflation expectations are more firmly anchored there and the domestic environment is more stable. The yield on the 10-year Swiss government bond is therefore around 0.4%. Despite this environment of rising rates, domestic bonds continue to offer very modest return prospects, insufficient to cover inflation in the long term.

Pension planning: the need for diversification

This constraint of modest returns is particularly critical in the context of occupational pensions. In an environment of persistently low interest rates, Swiss government bonds alone are no longer sufficient to guarantee a return high enough to fund projected retirement benefits. However, this financial reality is part of a broader context. Demographic ageing is profoundly altering the balance of pension systems, placing increasing pressure on public schemes and limiting their ability to cover future living standards. At the same time, traditional tax planning and pension tools are evolving and becoming more complex, reducing the scope for optimisation. Diversification is therefore emerging as a key lever. Equities, real assets, and private and occupational pensions are becoming essential for generating returns and securing long-term objectives. More broadly, retirement planning can no longer be viewed as a passive process. It now requires a holistic approach, integrating asset allocation, taxation and life expectancy. In this changing environment, the ability to structure diversified and tailored solutions is a key factor in addressing long-term wealth management challenges.