What is the DBRS rating and economic outlook for Switzerland in 2025?

What is the DBRS rating and economic outlook for Switzerland in 2025? - Portugal Business News

News Economy Europe – Here is Switzerland’s credit rating in 2025, including its Economic Outlook, fiscal position, public debt ratio forecast, GDP growth forecast, Net International Investment Position, as well as the resilience of Switzerland’s banking system and house prices forecast, according to the DBRS July 2025 report:

Switzerland’s Credit Rating for foreign & local currency according to the DBRS July 2025 announcement:

Switzerland’s credit rating according to the Morningstar DBRS announcement on July 18^th, 2025, is AAA with a stable outlook both for long-term foreign and local currency.

Switzerland’s credit rating according to the Morningstar DBRS announcement on July 18^th, 2025, is R-1 (high) with a stable outlook both for short-term foreign and local currency.

Switzerland’s Economic Outlook according to the DBRS in July 2025:

The confirmation of the Stable trend reflects Morningstar DBRS' view that the risks to Switzerland's credit ratings remain limited, despite a challenging external environment.

Switzerland's AAA credit ratings remain underpinned by its wealthy and diversified economy, sound public finances, and solid external position. Strong institutions, predictable policies, and historical neutrality have long made Switzerland a safe haven for investors. Switzerland benefits from a highly productive workforce, high levels of educational attainment and labor force participation.

Switzerland’s fiscal position according to the DBRS July 2025 report:

Switzerland's prudent fiscal policy, underpinned by its debt brake rule, and its low public debt ratio constitute an important credit strength. Under the debt brake rule, higher expenditures are financed by increased revenues or corresponding expenditure cuts. The debt break, which was introduced in 2003 at the federal level, mandates a balanced budget over the business cycle.

Switzerland’s public debt ratio forecast according to the DBRS July 2025 report:

According to the IMF, the general gross debt should continue to slightly decrease in the coming years, reaching 35.1% of GDP in 2027 versus 37.6% in 2024. The public debt ratio, as defined in the Maastricht Treaty, stood at 25.5% of GDP at year-end 2024.

Switzerland's prudent fiscal policy anchored by its debt brake rule has helped maintain low debt levels, supporting the country's resilience to shocks and helps the country to stand out among other highly rated sovereigns. All debt is denominated in local currency. With government bond yields decreasing since the beginning of 2023, interest expenditures should remain extremely low and are anticipated at 0.1% of GDP for the general government by the IMF by 2027.

Switzerland’s GDP growth forecast according to the DBRS July 2025 report:

 

Switzerland’s GDP per capita is estimated at USD 104,523 in 2025, one of the highest in the world. The Swiss economy is one of most competitive globally and benefits from a highly productive workforce, characterized by a very educated labor force and elevated labor force participation (83.9% as of Q1 2025), and internationally competitive industries and companies.

Switzerland's economic activity moderated in 2024, with real GDP growth (sports events adjusted) coming in at 1.0% from 1.2% in 2023, mainly reflecting subdued foreign trade despite strong domestic demand. While the Swiss Federal Expert Group on Business Cycles anticipated real GDP growth (sports events adjusted) of 1.5% for 2025 and 1.7% for 2026 in December 2024, it has revised down its forecasts to 1.3% for 2025 and 1.2% for 2026. This downward revision reflects the assumption that the global economy is expected to grow at a slower pace, due to international trade tensions and economic uncertainty, which is likely to dampen cyclically exposed sectors of the Swiss export industry.

Switzerland’s Net International Investment Position according to the DBRS July 2025 report:

Switzerland benefits from a large net international investment asset position (NIIP) amounting to 119.3% of GDP in Q1 2025. This reflects the substantial accumulated net wealth of Swiss residents and official reserves. Switzerland's total reserve assets rose from USD 341 billion in 2011 to USD 1,111 billion in 2021 and stood at USD 912 billion in 2024 or close to 100% of GDP.

What is the resilience of Switzerland’s banking system according to the DBRS July 2025 report:

 

The Swiss banking sector is one of the most important pillars of the Swiss economy accounting for around 5% of value added, however its size, which is nearly 420% of GDP, means that shocks to banks, especially if systemically important, can have more pronounced effects on the economy.

Following the review of the Credit Suisse case, the Swiss Federal Council proposed in June 2025 several measures to increase capital requirements for systemically important banks with foreign subsidiaries and to strengthen liquidity in a time of crisis while improving resolution planning through additional requirements on the recovery and resolution of systemically important banks. The consultation process for the legislative amendments will be opened in autumn 2025 and in the first half of 2026 respectively. The entry into force is expected for 2028 at the earliest.

What is Switzerland’s house prices forecast according to the DBRS July 2025 report:

Morningstar DBRS considers that the exposure of Swiss banks to the real estate market remains a source of vulnerability for financial stability. With lower interest rates since 2024, real estate price growth has picked up, although at a slower pace than in 2021 and 2022.

The high demand and low supply will most likely keep the housing market tight, with the risk of overheating in the market remaining. Switzerland's household debt-to-GDP ratio remains high at 125% at the end of 2024, nevertheless risks are mitigated by the large and liquid balance sheet of households. Switzerland's high mortgage debt, the contingent liability risks posed by its large banking sector and the banks' exposure to the real estate market weigh on the negative adjustment in the "Monetary Policy and Financial Stability" assessment.