Switzerland – Economy Overview

• Capital: Berne
• Area: 41,285 km²
• Population: 7,591,400
• GDP (PPP): US$296.2 billion
• GDP (Nominal): US$423 billion
• Currency: Swiss Franc (CHF)
• Time Zone: GMT+1

Switzerland's economy is one of the most stable economies in the world. Switzerland fashioned itself as a safe haven for investors with a policy of bank secrecy and monetary security, creating an economy that is increasingly reliant on foreign investment. Due to Switzerland's high labor specialization and diminutive size, trade and industry have become the keys to Switzerland's economic sustenance. Switzerland has one of the highest incomes per capita in the world, along with low budget deficit and low unemployment rates, mainly thanks to its booming finance industry.

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In the middle of the 19th century, following the industrial revolution, Switzerland's industrial began to grow, becoming by far the wealthiest country in Europe with the largest industrial sector by the beginning of the 20^th century. WWI marked a crisis for Switzerland's economy, but by WWII the country had recovered thanks to wide cultivation of grain and the world's first electrically powered railway. During WWII, Switzerland's economy profited from the export of weapons to the German Reich and commercial relations with the axis powers, which resulted in a short term international embargo. However, Switzerland's production facilities remained mostly unharmed which expedited the country's swift economic recovery after the war.

During the next few decades Switzerland's energy consumption steadily increased as did its dependency on imported oil. The country's energy consumption decreased as a result of the 1973 international oil crisis, a trend which continued into the 80s due to the hike in oil prices. Switzerland entered the 90's with a 3-year-recession which was mirrored by a decrease in energy consumption and export growth rates, and a sharp increase in unemployment. After a brief recovery, it experienced yet another slowdown starting from 2001, with rising unemployment rates and a decrease in exported goods and services as well as the tourist industry.

From being Europe's leading economy at the beginning of the 20^th century, Switzerland slipped to fourth place among European countries in terms of GDP per capita in 2008. On the other hand, 2008 marked a recovery in economic performance which has remained solid so far.

Trade

Switzerland depends on exports to generate income and on imports for raw materials and goods. With the exception of a protectionist agricultural policy, Switzerland has exceptionally liberal investment and trade policies. Switzerland one of the most secure investment places in the world and the country is renowned for its supreme standards of financial services and banking. The export industry accounts for almost half of Switzerland's corporate earnings. Major Swiss exports include machinery, electronics, precision instruments, chemical products, banking and insurance services and tourism. Swiss imports consist mainly of natural resources since most can't be produced domestically in adequate amounts. These include chemicals, fossil fuels such as oil, machines, electronic goods, precision instruments and vehicles.

Employment

The Swiss skilled and peaceful workforce is one of the country's greatest qualities. One quarter of the country's workers is unionized, and the workforce is generally characterized by a readiness to settle disputes rather than resort to labor action. As a result of the global economic slowdown, the Swiss workforce saw massive layoffs, major management scandals and cooling foreign investment attitudes which had a straining effect on the usual labor peace in 2003. Several trade unions encouraged strikes against several companies, among them Swiss Air, Orange, and Coca-Cola. Nevertheless, Switzerland's strike record managed to maintain its place among the lowest in the OECD.

Agriculture

Switzerland enforces high tariffs in combination with massive domestic subsidizations to ensure that the country remains agriculturally self sufficient. Today Switzerland subsidizes over 70% of its agriculture compared to the EU's 35%. This strict protectionism policy is mostly harmful to the workforce. Domestic agriculture tends to monopolize labor which can be better employed elsewhere and acts as a buffer against imported labor. As a consequence, Switzerland has a high cost of living with regard to rent as well as food, since farms retain vast areas that are much needed for housing. Around 40% of Swiss land is used for agricultural goals.

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