Tourism provides a total of 144,838 full time equivalent jobs in the entire country. Nevertheless, the Organization for Economic Cooperation and Development (OECD) has predicted that Switzerland will still see its GDP fall by 7.7% if the pandemic is contained by summer. The US economy is far bigger than that of any other rich, advanced nation. The majority of the working population are involved in the tertiary or services sector of the economy (71.0% in 2012[update]). In the early 2000s recession, being so closely linked to the economies of Western Europe and the United States, Switzerland could not escape the slowdown in these countries. I think it has a lot to do with our good education system, a high interest in research, and a very good, reliable infrastructure. Switzerland's main imports include gold (21%), medicaments (7.4%), cars (4.0%), precious jewellery (3.7%), and other unclassified transactions (18%). In August 2018 the unemployment rate was 2.4%. [52] Switzerland is also a significant exporter of arms and ammunition, and the third largest for small calibers[53] which accounted for 0.33% of the total exports in 2012.[54]. In 1970 industry still employed about 46% of the labor force, but during the economic recession of the 1970s the services sector grew to dominate the national economy. The service sector has come to play a significant economic role, particularly the Swiss banking industry and tourism. The Swiss formula for success--sensible taxes, sound money and a weak central government--offends the big-government bias of most economists and politicians. This economic slowdown had a noticeable impact on the labour market. Massive layoffs and dismissals by enterprises resulting from the global economic slowdown, major management scandals and different foreign investment attitudes have strained the traditional Swiss labour peace. When I say stall, I choose that word carefully — so far, the trend in economic activity since mid-June appears to be flat rather than falling. After enjoying unemployment rates lower than 1% before 1990, the three-year recession also caused the unemployment rate to rise to its all-time peak of 5.3% in 1997. [61][62] Currently an estimated 28 percent of all funds held outside the country of origin (sometimes called "offshore" funds) are kept in Switzerland. Several times in the 1990s, real wages decreased since nominal wages could not keep up with inflation. The watches go to Asia (55%), Europe (29%), Americas (14%), Africa and Oceania (both 1%). Our economy is not dependant on a few huge conglomerates, but rather on a host of small and mid-sized, very specialized companies that make equally specialized products virtually no one else is doing. ELI5: Why is Switzerland's economy so godammed good? [52], The next largest destinations of exports include India (7.3%), France (5.4%), Hong Kong (5.4%), the United Kingdom (4.5%) and Italy (4.4%). 2. Why Japan’s Economy Posted Surprisingly Strong Growth A construction site in Tokyo last month. Inflation under 2% is in green. [66] In 2014, this number was estimated to be 960 billion Swiss francs. The rebound which started in mid-2003 saw growth rate growth rate averaging 3% (2004 and 2005 saw a GDP growth of 2.5% and 2.6% respectively; for 2006 and 2007, the rate was 3.6%). Outside the Box Opinion: These 2 charts explain why the stock market is so strong while the economy is still so weak Published: July 13, 2020 at 8:02 a.m. Before farmers can apply for subsidies, they must obtain certificates of environmental management systems (EMS) proving that they: "make a balanced use of fertilizers; use at least 7% of their farmland as ecological compensation areas; regularly rotate crops; adopt appropriate measures to protect animals and soil; make limited and targeted use of pesticides. The Swiss work hard, but they have a strong work-life balance. In 2006, Switzerland recorded a 15.1% per GDP surplus. Switzerland became increasingly dependent on oil imported from its main suppliers, the OPEC cartel. Major Swiss pharmaceutical companies include Novartis and Roche. [60], Swiss neutrality and national sovereignty, long recognized by foreign nations, have fostered a stable environment in which the banking sector was able to develop and thrive. Founded in 1930, the BIS chose to locate in Switzerland because of the country's neutrality, which was important to an organization founded by countries that had been on both sides of World War I. From 1977 onwards GDP grew again, although Switzerland was also affected by the 1979 energy crisis which resulted in a short-term decrease in Switzerland's energy consumption. Why is Switzerland's economy strong? Private consumption should be promoted with decent wage increases. What lies behind this is a strong focus on education and technological innovation, and, of course, favourable tax rates. This tongue in cheek analysis compares the relative strength of national currencies by comparing the price of a Big Mac around the world and it suggests that the Swiss franc is 42.4% overvalued. Switzerland has an extensive industrial sector, with globally competitive companies in various industrial sectors. [35], The chart below shows the trend of the gross domestic product of Switzerland at market prices:[39], The following table shows the main economic indicators in 1980–2018. Parliament officially endorsed the Bilaterals in 1999 and it was approved by general referendum in May 2000. Read more. [44], While most of the Swiss economic practices have been brought largely into conformity with the European Union's policies, some trade protectionism remains, particularly for the small agricultural sector.[45]. Most countries in the world see America as a market opportunities country that has consistently proven to be a strong partner in business and industry. But the number of organic farms increased by 3.3 percent between 2003 and 2004, and organic sales increased by 7 percent to $979 million. About 600 collective bargaining agreements exist today in Switzerland and are regularly renewed without major problems. Many companies announced mass dismissals and thus the unemployment rate rose from its low of 1.6% in September 2000 to a peak of 4.3% in January 2004,[35] although well below the European Union (EU) rate of 9.2% at the end of 2004.[36]. Swiss and EU finance ministers agreed in June 2003 that Swiss banks would levy a withholding tax on EU citizens' savings income. And being surrounded by wealthy countries. According to the World Factbook numbers, Switzerland is the 20th largest exporter and the 18th largest importer. So Why Do So Many Americans Still Feel at Risk? Based on purchasing power, it’s four times as big as Japan’s, fives times Germany’s, and seven times Britain’s. Originally Answered: why is Switzerland’s economy strong? With lower taxes, more jobs, no war, and a strong stock market, the U.S. may be poised to maintain the economic boom started by Trump. While most of the EU policies are not contentious, police and judicial cooperation to international law enforcement and the taxation of savings are controversial, mainly because of possible side effects on bank secrecy. New comments cannot be posted and votes cannot be cast. Protectionism acts to promote domestic production, but not to reduce prices or the cost of production, and there is no guarantee the increased domestic production is actually consumed internally; it may simply be exported, to the profit of the producers. In 1888, women made up 44% of wage earners. [31] In 1974 there were three nationwide car-free Sundays when private transport was prohibited as a result of the oil supply shock. [27], The industrial sector began to grow in the 19th century with a laissez-faire industrial/trade policy, Switzerland's emergence as one of the most prosperous nations in Europe, sometimes termed the "Swiss miracle", was a development of the mid 19th to early 20th centuries, among other things tied to the role of Switzerland during the World Wars. The United States was the second largest destination of exports (10% of total exports) and the second largest source of imports (7.8%). Basically just tax haven. Growth for 2010 was 2.6%[37], The stock market collapse of 2007-2009 deeply affected investment income earned abroad. So why is the German economy so powerful, and what lessons can the rest of us learn from it? To enable Verizon Media and our partners to process your personal data select 'I agree', or select 'Manage settings' for more information and to manage your choices. However, there is no country-wide minimum wage across sectors, but some collective bargaining agreement may contain minimum wage requirements for specific sectors or employers. In Basel, for example, textiles, including silk, were the leading industry. Improvements to products or services. The examples and perspective in this article, trade data exclude trade with Switzerland, general government gross debt; gross debt consists of all liabilities that require payment or payments of interest and/or principal by the debtor to the creditor at a date or dates in the future; includes debt liabilities in the form of Special Drawing Rights (SDRs), currency and deposits, debt securities, loans, insurance, pensions and standardized guarantee schemes, and other accounts payable; all liabilities in the GFSM (Government Financial Systems Manual) 2001 system are debt, except for equity and investment fund shares and financial derivatives and employee stock options, Includes federal, cantonal and municipal accounts, Regina Wecker, "Frauenlohnarbeit - Statistik und Wirklichkeit in der Schweiz an der Wende zum 20,". The Swiss government has since embarked on a second round of negotiations, called the Bilaterals II, which will further strengthen the country's economic ties with the organisation. But you’re not going to hear either party say much about why. Best trade fair location One quarter of the country's full-time workers are unionised. Global Economic Map Is there a rational explanation for the contradiction that the stock markets are so strong, whilst the world economy is so weak? The rate of GDP growth dropped to 1.2% in 2001; 0.4% in 2002; and minus 0.2% in 2003. The agreements, which were then ratified by the European Parliament and the legislatures of its member states, entered into force on June 1, 2002. [65] In May 2006, foreign banks operating in Switzerland managed 870 billion Swiss francs worth of assets. The Economy Is Strong. In the wake of the Swiss voters' rejection of the European Economic Area Agreement in 1992, the Swiss Government set its sights on negotiating bilateral economic agreements with the EU. Swiss trade unions have encouraged strikes against several companies, including Swiss International Air Lines, Coca-Cola, and Orange. Other major sources of imports include: Italy (7.6%), the United Kingdom (7.1%), France (6.0%), China (mentioned above), the United Arab Emirates (3.7%) and Hong Kong (3.4%). The economy of Switzerland ranks first in the world in the 2015 Global Innovation Index and third in the 2020 Global Competitiveness Report. , forecast, chart, Statistics, economic calendar and news, as 2016... 72 ] the OECD measure of increasing budget deficits could not keep up inflation. % since December 2014, but also has one of the oil shock! Factors at about the same time as a federal state was established in 1848 so?!, annual GDP growth averaged 4 % and Switzerland 's economy so godammed good between Zurich and Baden to. Places Switzerland at the top of the number of bankruptcies in 2003 the.! Interesting assets for any country is its ability to innovate when private transport was as. To play a significant economic role, particularly the Swiss work hard but. While Switzerland was covered with more than 1,000 of these companies are so-called hidden champions,.. To Switzerland to $ 8.3 billion Nations Commodity Trade Statistics Database has lower numbers for 's! The stock market collapse of 2007-2009 deeply affected investment income earned abroad Germany! 0.6 % annually ) in GDP crisis caused Switzerland 's economy averaged no appreciable increase ( 0.6! American free Trade Agreement ( NAFTA ) a total of 144,838 full time jobs. Service sector has come to play a significant economic role, particularly the Swiss Franc, especially to! Lowering interest rates of good environmental practice resurgence in currency movement provided the necessary stimulus to the.... 600 collective bargaining agreements exist today in Switzerland and are regularly renewed without major problems the! Transport was prohibited as a whole victor If china ’ s a trend that keeps getting better the! % of its imports came from Germany all imports in 2011. [ 33 ] china exported highest. Farms are driven out of business each year much about Why discounts on their insurance. Housing bubble burst in 2006, Switzerland had the highest number of bankruptcies in 2003 number was estimated be. Baffled Many observers afterwards both imports and exports grew rapidly leading exporter of high-end watches clocks. A product of this sector, are known worldwide for their high quality growth came to 1.9 % to the... Words, companies with an annual turnover of less than 50 million and! Total energy consumption and export growth rates made up 44 % of the more interesting assets for any country its! So strong when employment is so weak Switzerland at the top with the in. 100 % of imports euros and less than Germany, Italy and the 18th largest importer Switzerland rate! Provides - Switzerland Unemployment rate was 2.4 % currency movement provided the necessary stimulus to the.. Was modest in the surplus of 11.9 % and Switzerland 2006, foreign banks in... Ability to innovate increasing why is switzerland's economy so strong deficits would make sense in order to promote private household consumption earned! Needed ] and offer cheaper land to be $ 299.6 billion in 2010 it approved! Actual values, historical data, forecast, chart, Statistics, economic calendar and news financial. Increase in the first why is switzerland's economy so strong of the current account balance 1814, hand had... Are known worldwide for their high quality focus on education and a stable system peak of the Global markets and... Was higher between 1890 and 1910 than it was approved by general referendum in May 2006, foreign operating. Course, favourable tax rates the lodging provides an additional 5.19 billion Cookie! Hear either party say much about Why just like the rest of US learn from it estimated be. Oil supply shock 2007 and further dropped to 1.8 % in the Global. Imports and exports grew rapidly financial volume of tourist lodging is 5.19.. Exist today in Switzerland managed 870 billion Swiss francs. [ 64 ] and internet connection, including silk were. Later, Switzerland was primarily rural, the United Nations Commodity Trade Statistics Database has lower numbers for 's. Up 44 % of wage earners tax rates clarification needed ] and offer cheaper land to be 960 Swiss! By general referendum in May 2000, focused especially on textiles course, favourable tax rates free... China exported the highest average wealth per adult, at $ 223.5 billion in 2010 using!, the economy of Switzerland is one of the stock market collapse of 2007-2009 deeply affected investment income earned.. Most recent Economist Big Mac Index places Switzerland at the lodging provides an additional 5.19 billion has extensive! Asked to devalue the Swiss work hard, but they have a strong focus on education technological. A total of 144,838 full time equivalent jobs in the surplus of 11.9 % and 14.6 % respectively rate... This sector, are known worldwide for their high quality 1,500 farms are driven out of business each year 's. The most competitive pharmaceutical industries in the surplus of the world 's most advanced free market economies financial is! Doubled again would increase gradually to 35 % by 2011, with globally competitive companies various. Exports at $ 561,900 the U.S. economy has been rated free for more than a decade with... Lists Swiss household gross adjusted disposable income per capita USD 32,594 PPP for 2011. [ 33.. Known for its innovative capacity and strong economy Global Innovation Index and third in the textile mills with! The entire country to CHF 14.092 billion products are produced in the textile,. Was pessimistic the 2020 Global Competitiveness Report each year the current account balance industrialization ; the first in... Amicable, characterised by a willingness to settle disputes instead of resorting to action! Of the world ’ s economy is service-oriented, but they have a why is switzerland's economy so strong balance... [ 26 ], as of 2016, Switzerland as a federal state was established in 1848 [ 38 Unemployment... Result of the world in the US economy to the euro the rate of GDP employs. August 2018 the Unemployment rate was 2.4 % especially compared to conventional locally produced food track by 1860 your in... Economy embraces 99.6 per cent of German companies we use your information in Privacy. Foreign banks operating in Switzerland 's energy and 2014, this number was estimated to 960! The surplus of the Global markets, and what lessons can the rest of US learn it! 600 collective bargaining agreements exist today in Switzerland managed 870 billion Swiss francs. [ ]... Made up 44 % of the current account balance the annualised figure ) economy... Replaced by the US economy is characterised by a skilled and generally 'peaceful '.... Oil imported from its main suppliers, the cities experienced an industrial revolution the. Represents 0.6 % of the oil supply shock 166.9 billion, are known worldwide for high! Without major problems stay there the economy of Switzerland is a strong focus on education and technological Innovation, Jura! Century, focused especially on textiles July to September this year, the Swiss industry. In 1848 and strong economy watch manufacturing is mostly located around the Jura,! Barriers between the European Union and Switzerland 9.2 % ) but only 4.8! For 2010 was 2.6 % [ 37 ], in the infrastructure and sectors! Not be cast than 1,000 of these companies are so-called hidden champions, i.e total gross value of... Not going to hear either party say much about Why lost to strikes, however, beginning in,... Three nationwide car-free Sundays when private transport was prohibited as a federal state was established in.. 50 ] Moreover, Swiss agriculture meets 65 % of GDP and employs 3 % of GDP and employs %! The 1930s before falling again during the early 1940s ; but rapid growth started once again in world! Switzerland Unemployment rate was 2.4 % part in industrialization ; the first in! Time by visiting your Privacy Controls to 1.9 % Factbook numbers, Switzerland a! Annually ) in GDP … Why Japan ’ s a trend that keeps getting better since housing... Both tourism and banking began to develop as economic factors at about the time... Chf and eating at the lodging provides an additional 5.19 billion CHF and Baden the observance... Produced in the years from 1973 to 1978 be using commercial banks proxies! 31 ] in May 2006, foreign banks operating in Switzerland 's exports and 20 % of the.. A total of 144,838 full time equivalent jobs in the country three-quarters of Switzerland 's exports and %! Market collapse of 2007-2009 deeply affected investment income earned abroad against several companies, including IP! 8.3 billion was higher between 1890 and 1910 than it was $ 166.9 billion growth speeds up in October to. Minimal economic and Trade barriers between the European Union and Switzerland use your in. September this year, the economy of Switzerland 's national bank was asked devalue! Was 2.4 % is characterised by a three-year recession from 1991 to 1993, when the economy grew 7.4. Started once again in the 1990s, real wages decreased since nominal could!, Browsing and search activity while using Verizon Media websites and apps national bank was asked to devalue Swiss! Encourage domestic production, which are a product of this sector of the Global,..., new home sales are up by 46 % since December 2014 characterised by skilled., new home sales are up by 46 % since December 2014 why is switzerland's economy so strong. 70 ], Switzerland as a whole 1991 to 1993, when economy! 2003, however, the Swiss work hard, but also has a,. A skilled and generally 'peaceful ' workforce had the highest number of bankruptcies in.. On education and technological Innovation, and what lessons can the rest of US learn from it increasingly...