Switzerland flag Switzerland: Economic and Political Overview

The economic context of Switzerland

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

For centuries Switzerland has adhered to a policy of armed neutrality in global affairs, which has given it the access and political stability to become one of the world's wealthiest countries, with an efficient market economy. Its standard of living, industrial productivity and quality of education and health care systems are among the highest in Europe. The global economic crisis triggered by the Covid-19 pandemic caused a slowdown in Swiss growth; nevertheless, the country’s economy continued to recover strongly in 2021 thanks to the easing of most COVID-19 restrictions, with GDP rising above the pre-crisis level of Q4 2019 over the summer. Overall, GDP grew an estimated 3.7% in 2021, thanks to buoyant domestic demand, in particular private consumption, and investment. However, international supply and capacity bottlenecks are putting pressure on the industrial sector, that coupled with the measures taken to contain the impact of the Omicron variant are expected to cause a slowdown in economic growth, projected at 3% this year and 1.4% in 2023 (IMF), when growth in domestic demand and the export industry should gradually decrease.

Due to the Covid-19 crisis, public finances have been under pressure in recent years. The government implemented fiscal support measures amounting in total to about 5.3% of GDP for 2020 and 2021, resulting in a negative budget deficit (1.5% of GDP in 2021). As the situation normalizes and the economy rebounds, the IMF expects the budget to be positive by 0.1% over the forecast horizon. The debt-to-GDP ratio increased only marginally, to reach 42.7% in 2021, and is projected to follow a downward trend this year (41.6%) and in 2023 (40.9%). Increased prices for energy and materials prompted a small rise in inflation, which stood at 0.4% in 2021 (from deflation of 0.7% one year earlier). IMF analysts predict a marginal increase of inflation at 0.6% and 0.8% in 2022 and 2023, respectively, still well below the Swiss National Bank's 2% target. Switzerland remains high atop the list of preferred tax havens due to its low taxation of foreign corporations and individuals. The flow of overseas wealth to the country has come in for much criticism in past years, due to concerns over tax evasion. However, after signing an agreement on the automatic exchange of information with the European Union, Switzerland put an end to bank secrecy. Since then, Swiss banks are required to share their clients' information with foreign tax authorities.

Thanks to short-time working schemes, the crisis’ overall impact on employment remained muted, with a marginal increase in the unemployment rate from a pre-pandemic level of 2.3% to 3.1% in 2021. Employment growth shall be slow over the forecast horizon, with the unemployment rate fluctuating around 3%. Overall, Switzerland is one of the wealthiest countries in the world, with a GDP per capita (PPP) estimated at USD 75,880 in 2021 by the IMF (the 11th-highest worldwide). Nevertheless, according to the latest data available from the Federal Statistical Office, 8.7% of the Swiss population are affected by income poverty.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 732.49751.88e810.83862.82897.98
GDP (Constant Prices, Annual % Change) 1.2e-2.53.73.01.4
GDP per Capita (USD) 85,722e87,36793,51598,771102,030
General Government Balance (in % of GDP) 1.1e-2.1-1.50.10.1
General Government Gross Debt (in % of GDP) 39.8e42.442.741.640.9
Inflation Rate (%) 0.4-0.70.62.51.6
Unemployment Rate (% of the Labour Force) 2.33.1e3.13.03.0
Current Account (billions USD) 49.1328.5058.4764.8665.03
Current Account (in % of GDP) 6.73.8e7.27.57.2

Source: IMF – World Economic Outlook Database, October 2021

Note: (e) Estimated Data

Main Sectors of Industry

Switzerland is one of the most competitive economies in the world due to its strong added value services, its specialized industries and a motivated and highly skilled workforce of 4.9 million people. Agriculture represents 0.7% of GDP and employs 2.6% of the active population (World Bank, latest data available). The primary agricultural products are livestock and dairy products, though the country is also home to over 9,000 wineries. Swiss authorities grant numerous direct subsidies to farmers in order to meet strict ecological criteria, such as soil protection. The country has hardly any mineral resources. Despite the small size of the agricultural industry, organic farming has experienced considerable growth (4,902 organic farms, 15.3% of the total, according to the Federal Statistical Office), but with big cantonal differences.

Industry employs 20.3% of the workforce and constitutes 25.2% of GDP. Switzerland is renowned worldwide for the high quality of its manufactured products, which include watches, motors, generators, turbines and diverse high-technology products. The manufacturing sector alone is estimated to contribute 8.1% of GDP. The strong industry sector is driven by large exporting groups. Basel, in particular, is home to a very dynamic and powerful chemical and pharmaceutical industry. Electricity is generated chiefly from hydraulic and nuclear power, and hydroelectric resources provide almost two-thirds of the country's energy. Having suffered its worst year in history in 2020, the Swiss watchmaking industry recovered in 2021, on the back of strong demand from China and the U.S.

The service sector represents 71.3% of GDP and employs 77% of the workforce. Well-developed and globally competitive sectors, such as banking, insurance, freight and transport, have contributed to the development of international trade across Switzerland. The banking sector alone represents 9.7% of gross value added and is in moderately good shape despite considerable headwinds. Almost half of the EUR 7,280 billion assets currently managed by Swiss banks originated abroad. The system comprises four major banks, 24 cantonal banks, 39 stock exchange banks, one Raiffeisenbank and 59 regional and savings banks, for a total of 243 banks with 2,477 branches (European Banking Federation). Tourism, which adds significantly to the economy, helps to balance Switzerland's trade deficit. Nevertheless, the Covid-19 pandemic had a huge impact on the Swiss tourism industry due to travel restrictions worldwide, as revenue from international tourism fell by almost 48% to USD 10.3 billion (Federal Statistics Office).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 2.6 20.3 77.1
Value Added (in % of GDP) 0.7 25.2 71.3
Value Added (Annual % Change) -2.1 -2.8 -2.0

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

Find more information about your business sector on our service Market reports.

 
 

Find out all the exchange rates daily on our service International currency converter.

 

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
81,9/100
World Rank:
4
Regional Rank:
1

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
8.08/10
World Rank:
8/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

See the country risk analysis provided by Coface.
 

Return to top

Sources of General Economic Information

Ministries
List of departments
Federal Department of Finance (FDF)
Federal Department of Environment, Transport, Energy and Communications (DETEC)
Federal Department of Home Affairs (FDHA)
Statistical Office
Federal Statistical Office
Central Bank
Swiss National Bank (SNB)
Stock Exchange
Switzerland Stock Exchange (SIX Swiss Exchange)
Economic Portals
SwissWorld
 

Return to top

Any Comment About This Content? Report It to Us.

 

© Export Entreprises SA, All Rights Reserved.
Latest Update: June 2022