This is the second time that Switzerland faces a negative inflation rate after March 2021.

Something like this is bad if, and only if it persists (which may not happen here). Although a negative inflation increases the purchasing power of consumers, it could soon lead to a delay in consumption (consumers will simply wait for prices to decrease further), which can then delay investments and thus hurt the economy.

For now it seems that there is no reason for panic, though. Many Swiss economists have been expecting that, arguing that the current negative inflation is imported due to a strong Swiss franc (which is what the article seems to suggest) that reduced the price for imported goods. The downward trend was mainly driven by sharper declines in transport prices (-3.7% in May vs -2.6% in April), and in food and non-alcoholic beverages (-0.3% vs -0.8%).

On a monthly basis, the consumer price index inched up 0.1% in May compared to April. The Swiss core inflation (which excludes some volatile items such as food and energy) reached also a new low but remained positive in May at 0.5%, according to the Swiss Federal Statistics Office.

Economic forecasts see the inflation to go further down by the end of the second quarter 2025, and will increase to positive rates for the whole year 2025. But we might soon see negative interest rates in Switzerland for some time due to a strong national currency.

Addition:

There is a Morning Star / Dow Jones report on it:

[Swiss National Bank] Chairman Martin Schlegel has previously said that negative inflation was possible, and didn’t rule out negative interest rates. However, he has said the bank wouldn’t be guided by individual monthly inflation prints, but rather price stability to decide policy. The SNB expects inflation to average at 0.4% this year …

Switzerland faces “mild deflation until mid-2026”, Pantheon Macroeconomics senior Europe economist Melanie Debono said in a note to clients after the inflation print … Given May’s data, that is “enough for a jumbo cut” to bring the SNB to negative rates this month, she added.

So it could be that I will stand corrected with my statement of a projected positive Swiss inflation for the entire 2025 and we’ll see this by mid-2026 as Ms. Debono says (but I like the term “jumbo cut” :-))

Brussels has accused China of systematically discriminating against European providers. A European Commission investigation in January found that 87% of sampled Chinese public tenders discriminated, directly and indirectly, against imported medical equipment.

The China Chamber of Commerce to the EU called on Brussels to reconsider its decision, saying the measures add “new complexity to China-EU economic and trade relations.”

Just commented in another thread, but it fits also here:

We must note that the European Commission’s findings from its International Procurement Instruments (IPI) - published in January 2025, and commented, for example, by a law firm here. According to the investigation, China not only unfairly treated EU medical devices and suppliers in its public procurement, but the Chinese government did not contest these findings, noting (accurately) that it had not undertaken any international commitments on public procurement.

It’s somewhat weird that Beijing now criticizes the EU.

As an addition, we must note that the European Commission’s findings from its International Procurement Instruments (IPI) - published in January 2025, and commented, for example, by a law firm here. According to the investigation, China unfairly treated EU medical devices and suppliers in its public procurement, and the Chinese government did not contest these findings, noting (accurately) that it had not undertaken any international commitments on public procurement.

China is exporting nuclear power plants to Britain and electric cars to the EU … China doesn’t need us but we need China.

I have to respectfully disagree with that view.

First of all, the EU is a net exporter of electric cars. In 2024, the bloc exported 830,000 electric vehicles (+9 per cent year-on-year), while imports were at about 680,000 electric cars.

While imports from China remained steady in 2024 at more than 400 000 electric cars (60% of EU imports), the share of Chinese OEMs in imports from China grew to two-thirds in 2024, up from 50% in the previous year. The Chinese OEM Geely accounted for almost 40% of these imports, mainly through its brand Volvo Cars, according to statistics by the IEA.

Within the EU, sales of EVs by Chinese brands count for a small fraction of the total sales volume, with China’s BYD having sold ~7,000 in April 2025, for example (no 10 in the bloc), while market leader VW counts for ~200,000. If the EU would bloc Chinese EV imports, for example, it would hurt China extensively (supposedly more than the EU) as the Chinese economy could not sell its massive (and intentionally created) overcapacity. The EU doesn’t need Chinese EVs, but China needs the EU (and other foreign markets) if it wants to maintains its business model.

More importantly, however, there are very strong mutual dependencies between China and the West that have the potential to result in high economic costs for both sides in the event of a geopolitical conflict, may it be caused by Beijing’s ongoing support for Russia in its war against Ukraine, a possible Chinese attack against Taiwan, or other events.

The Western share of Chinese imports is certainly at very high levels for many very important key products such as semiconductors and some machinery.

But the West also accounts for a high share of China’s imports of other important goods, such as some foodstuffs, certain raw materials, and also some luxury products like perfume. If we look at China’s import/export ratios, we see it is 65:1 for ores, slag, and ash, and with an import share of almost 50 per cent the West holds a high leverage in this sector.

Chinese import/export ratios for mineral fuels is 8:1 (although the Western share is below 20 per cent here as the majority comes form emerging economies), for meat it is 36:1, for grain 21:1.

China is almost unilaterally dependent on aircraft and spacecraft machinery and parts thereof. Although the import/export ratio is quite low (2:1), the western share of Chinese imports is some 97 percent, according to the German Economic Institute (opens pdf – German source). This category displays China’s highest import dependency on the West, and there is practically no substitution by alternative trading partners and there appears to be only a small degree of substitutability possible through an expansion of domestic production.

[If interested, EU-China and other trade data with relevant links can be found here and using the Trading Economics data posted by @Saleh@feddit.org in this thread – and many other data bases, but make sure you look at the customs data, not China’s official statistics or something.]

So I don’t say that the EU or the West doesn’t depend on China, but I say that China depends also on the West if we look at the data of hilghly complex global supply chains. There are strong mutual dependencies.

The German Council of Economic Experts’ spring report -which the linked article refers to- is far less negative than the article suggests, at least in my interpretation. Among others, it recommends a range of measures for the government to promote investments, reduce public bureaucracy, and other developments.

For example, the linked article discusses Germany’s fiscal package by (truthfully) saying that it would increase the country’s debt, but the experts’ report also reads that the newly created special fund “aims to strengthen military defence capabilities, modernise public infrastructure, support decarbonisation and stimulate the German economy.” It is important to mention at this point that government spending has not yet been taken into account in the ~1% GDP growth forecast for 2026 (which is what the article seems to ignore), so the GDP growth next year will be higher (all other tings being equal).

The experts themsleves recommend to raise the threshold for defence expenditure in the federal budget to at least 2 % of GDP, and suggest to further increase public spending for public transport and education - things that, if done right, will be good for the society and economy in the long run. The German government has not yet announced how the new funds will exactly be used for, and without these numbers it is even harder to tell the future even in the short run.

This is not to say that it is all good and we are going to celebrate, but the doomsday approach is the wrong one I would say, at least when you read the entire report. But that’s just my view, maybe I am wrong.

[Made an edit to insert the link.]

Closer ties between the EU (and other economically developed blocs and countries) and ‘poorer countries’ are almost certain imho given the macroeconomic developments. The emerging market and developing economies’ share of the world’s GDP -based on Purchasing Power Parity according to the International Monetary Fund- rose from 35% in 1980 to 40% in 2000, and it now stands at +60% in 2025 while projected to increase further.

A second major point is the population growth. In Africa, for example, the working-age population (people aged 20-64 years) will almost double from 880 million now to 1.6 billion in 2050, according to the UN. This means that in 2050, 1 in 4 working people across the globe will be African.

It seems that emerging economies are about to face a similar ‘double-growth’ like the Europeans had in the decades after World War II: growth of the economy and growth of the population.

This could be an opportunity for these countries not only to strive economically but also to develop more democratic structures. As we have seen in research, as societies modernize, their ideological divides shift away from economic struggles towards debates over personal freedoms and identity-related issues. So it could be that a collaboration between the EU & allies with these LDCs (Least Developed Countries) is not just for a mutual economic benefit, but eventually also for the preservation of a rules-based world order where universal human rights are an integral part of the economy, which in turn would benefit all sides.

If the EU is ready to protect and further develop its democracies, the bloc could indeed be a more reliable alternative to the current governments of the U.S. and China. If the EU acts accordingly (and there are signs that it does imho), Mr. Trump’s politics could then even be the go-ahead for a more equal world order - supposedly the exact opposite of what he is aiming at.

But I say “if” and “could” and, of course, don’t know how it’ll develop. Maybe I am on the wrong track.

Not long ago, Chinese hackers attacked the U.S. wiretapping system, enabling the Chinese state to read and listen to citizens’ messages and calls. Intel agencies then urged the population to use encrypted messages.

And this is just one example what could go wrong. The damage to democracy will be severe as it will be will be exploited by bad actors because, as we know, there is no such thing as a “backdoor only for the good ones.” Or am I wrong here?