Swiss government trims economic growth forecast on Iran crisis uncertainty

ZURICH, June 18 (Reuters) - The Swiss government slightly reduced its 2026 economic growth forecast to 0.9% on Thursday, citing energy price hikes due to the Middle East crisis.

The government's previous forecast in March had been for a 1% increase in gross domestic product this year. The government also lowered its 2027 growth forecast to 1.6% from 1.7% previously.

Both figures were below the long-term average Swiss GDP growth rate of 1.8%.

"Higher energy prices are expected to lead to elevated inflation rates internationally and to a more restrictive monetary policy, particularly in European trading partner countries," the expert group at the State Secretariat for Economic Affairs (SECO) said in a statement.

Switzerland is traditionally one of Europe's more resilient economies, with big sectors, such as pharmaceuticals, less affected by swings in global demand.

Still, expectations of Swiss businesses for the next six months are generally deteriorating, the KOF Economic Institute said last month, particularly in the manufacturing and hospitality sectors. Exporters are also expecting a slowdown in international demand, KOF said.

The Swiss National Bank is also due to give its latest economic forecasts later on Thursday.

Switzerland has been shielded from rising inflation seen elsewhere due to the low weight of energy in the consumer goods basket as well as the strength of the Swiss franc preventing the price of imports rising.

Inflation this year is expected to be 0.6%, up from the previous forecast of 0.4%, and remain at 0.6% in 2027, SECO said.

The unemployment rate forecast increased to 3.1% this year, compared with 3.0% previously, and to 3.0% in 2027 from the March expectation of 2.8%. (Reporting by John Revill Editing by Tomasz Janowski)