SwitzerlandA brief economic portrait

Federal Department of Economic Affairs FDEAState Secretariat for Economic Affairs SECO

Table of contents

In the heart of Europe 4

The Swiss political system 5

Safe and stable 6

Exceptional quality of life 8

First-class infrastructure 11

Leading technology and research centre 12

Innovation and intellectual property protection 13

Knowledge transfer and research collaboration 15

Strong financial centre 16

Attractive tax regime 17

The Swiss economy in numbers 18

Main economic data 18

Gross domestic product (GDP) 19

Public debt 19

The structure of Switzerland’s economy 20

Exports and imports (per country) 21

Exports and imports (per industry sector) 22

Important economic actors in Switzerland 24

3

In the heart of Europe

Switzerland has borders with three of the four largest European markets. Switzerland is politically independent and is not a member of the European Union. However, a body of democratically approved bilateral agreements ensure close, long-term political cooperation with the EU and eco-nomic integration into the European market, home to nearly 500 million customers.

Furthermore, Switzerland is home to many international organisations such as the World Trade Organization (WTO), the World Health Organization (WHO), the International Com-mittee of the Red Cross (ICRC), the European Organization for Nuclear Research (CERN) or the International Federation of Football Associations (FIFA). Most of them are based in Geneva.

4 5

The Swiss political system

Switzerland is a republic and has one of the oldest democratic traditions among the world’s states. It is a nation formed from several ethnic groups with different languages and religions. The modern Swiss state was founded in 1848. The state has a federal structure and is divided into three political levels: municipal, cantonal and federal.

The federal government is responsible for everything assigned to it under the constitution, such as foreign and security policy, customs and excise, the monetary system, national legislation and defence. By global comparison, the 26 cantons have a high degree of autonomy. Healthcare, education, culture, and taxes are among the political areas in which they have a great deal of influence.

In accordance with the federal constitution, the Swiss people are the «sovereigns» of the country – in other words, they are the highest political body and they elect the parliament. Every Swiss citizen also has the right to participate in the shaping of the constitution and the legal system by means of referendum and initiative.

6 7

Switzerland’s political system is very stable and predictable. The robust federal system, the autonomy of the cantons, the business-friendly mentality and an extensive network of cultural, scientific and trade relations ensure security, growth and success.

Safe and stable

Political stabilityHighest stability = 10; lowest stability = 0Source: International Institute for Management Development (IMD) World Competitiveness Yearbook 2010

Switzerland consistently ranks among the top performing countries in international surveys and rankings when it comes to political and economic stability, government efficiency or overall competitiveness.

Government efficiencyHighest efficiency = 100; lowest efficiency = 0Source: IMD World Competitiveness Yearbook 2010

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Switzerland is known for its very high quality of life and is one of the most famous tourism destinations in Europe. The Swiss healthcare system is among the world’s best. A dense network of public and private hospitals guarantee access to outstanding medical care throughout the country. Pension provision is based on the «three-pillar principle», which combines state, occupational and personal retirement benefit systems.

Life can be wonderful here – thanks to a unique natural environment, a high standard of living and first-class facilities for sport, recreation, education and culture.

Exceptional quality of life

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Health and environmentBest infrastructure = 100; worst infrastructure = 0Source: IMD World Competitiveness Yearbook 2010

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Quality of lifeHighest quality = 10; lowest quality = 0Source: IMD World Competitiveness Yearbook 2010

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A dense rail and highway network, a nationwide energy supply system and properties to meet everyday requirements ensure mobility, security and convenience. The water and energy sup-ply systems cover the entire country. Postal and communica-tion services are also assured at all times, even in the remotest mountain valleys.

First-class infrastructure

Quality of infrastructureHighest quality = 7; lowest quality = 1Source: World Economic Forum, Global Competitiveness Report 2009–2010

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Fertile ground for creativity and innovation – nowhere are newly developed technologies and inventions better protected than in Switzerland. Switzerland has the most Nobel Prize winners relative to the size of its population and has the most patents per 100,000 inhabitants of any country in the world. The «European Innovation Scoreboard 2009», a comparative analysis of innovation performance, ranked Switzerland in first place in Europe, well above the EU average.

Innovation and intellectual property protection

Ranking

1 Japan

2 Switzerland

3 Finland

4 United States

5 Sweden

6 Germany

7 Taiwan

8 Netherlands

9 Israel

10 Denmark

Innovation indexSource: Economist Intelligence Unit (EIU), 2009

Nobel Prizes per capitaSource: IMD World Competitiveness Yearbook 2010

12 13

Leading technology and research centre

Well-respected universities, international networks and research at the highest level are the fruits of a prudent, well-focused national educational policy. Switzerland invests almost 3% of its GDP in research and development, and it hosts some of the leading universities of the world such as the Swiss Federal Institute of Technology.

Quality of scientific research institutionsHighest quality = 7; lowest quality = 1Source: World Economic Forum, Global Competitiveness Report 2009–2010

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Knowledge transfer between companies and universities is well entrenched. In both competitiveness rankings by the WEF and the IMD, Switzerland occupies top rankings also in this regard. This achievement is due to leading technology re-search at universities in broad networks of researchers and practitioners, and within clusters in several high-tech industries such as biotech or medtech.

Knowledge transfer and research collaboration

14 15

Knowledge transfer between companies and universitiesBest transfer = 10; worst transfer = 0Source: IMD World Competitiveness Yearbook 2010

Research collaboration between industry and universitiesExtensive collaboration = 7; no collaboration = 1Source: World Economic Forum, Global Competitiveness Report 2009-2010

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In private banking, asset management and insurance alike, Switzerland stands for experience, security and expertise. Around 340 banks, 260 insurance companies and 2,700 pension funds are based in Switzerland. The financial sector is very important economically, as its value creation totals 12% of GDP. The SIX Swiss Exchange has the highest percentage of listed foreign companies in Europe, at 25%.

A flexible, federally based tax system is the foundation for individual calculation and a modest tax burden. The standard income tax rate for corporates at the federal level is 8.5%. There are also income taxes at cantonal and municipal levels. The tax burden varies between different cantons and munici-palities. In order to prevent double taxation in Switzerland and abroad, Switzerland has entered into agreements with all key industrialised nations and many other countries.

Attractive tax regimeStrong financial centre

Ranking Financial centre

1 London

2 New York

3 Hong Kong

4 Singapore

5 Shenzhen

6 Zurich

7 Tokyo

8 Chicago

9 Geneva

10 Shanghai

11 Sydney

12 Frankfurt

Global financial centresSource: Global Financial Centres Index 6, City of London, 2009

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Gross domestic product (GDP)Main economic dataSwitzerland’s economy is one of the most competitive and stable in the world. It is an important hub for many industry sectors such as financial services or chemicals and pharmaceuticals; many world-class companies have their global or regional headquarters in Switzerland. Sustained purchasing power stability, low inflation, low capital costs and a good investment climate ensure economic prosperity.

The Swiss economy in numbers

Economy

Key figures 2009

GDP (nominal) in billion CHF 535.6

Per capita income in CHF 67,952

GDP growth – 1.2 %

Rate of inflation – 0.5 %

Unemployment rate 3.7 %

Imports in billion CHF 160.2

Exports in billion CHF 180.5

Key figures 2008Budget surplus, in % of GDP +1.1

National debt, in % of GDP 48.1%

Tax rate, in % of GDP 29.7

Direct investments in million CHF 2008

Direct investments abroad 808,566

Direct investments in Switzerland 467,122

Capital exports abroad 55,393

Capital imports into Switzerland 5,508

Workforce abroad 2,443,595

Workforce in Switzerland 242,651

Population 2009

Permanent resident population in thousands 7,702

Population density per km2 184

2008 2009

Gross domestic product 541,827 535,568

Change year-on-year 1.6% – 1.2%

Total consumption 366,623 371,987

Personal consumption 308,694 311,525

Government consumption 57,929 60,462

Exports of goods (with valuables) and services 305,556 268,945

Exports of goods 216,997 188,168

Exports of services (incl. tourism) 88,559 80,777

Imports of goods (with valuables) and services 244,987 215,656

Imports of goods 201,957 172,249

Imports of services (incl. tourism) 43,030 43,407

Switzerland in figuresSources: Swiss Statistics, Swiss National Bank, UBS Economic Research

Annual aggregates of gross domestic product (expenditure approach)in million CHF, at current prices, Source: SECOAverage exchange rates in 2009: 1 EUR = 1.5100 CHF, 1 USD = 1.0868 CHF

Public debt

2009 2010

China 6.1 5.4

Switzerland 1.4 – 1.0

Russia – 5.9 – 3.5

Austria – 3.6 – 4.5

Italy – 5.3 – 5.2

Belgium – 5.8 – 5.4

India – 6.7 – 5.7

Germany – 3.3 – 5.7

Netherlands – 4.9 – 5.9

France – 7.9 – 8.2

Greece – 12.9 – 8.7

Japan – 10.3 – 9.8

Spain – 11.4 – 10.4

United States – 12.5 – 11.0

United Kingdom – 10.9 – 11.4

Government deficits 2009 and 2010 (projection)in percentage of GDP, Source: IMF, World Economic Outlook, April 2010

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The structure of Switzerland’s economyThe service sector is the most important sector by far in Switzerland’s economy. Switzerland’s gross domestic product (GDP) per capita is the third-largest in the world, or seventh-largest when adjusted for purchasing power. The service sec-tor generates some 70% of GDP. Comprising 28% of GDP, the industrial sector is also an important mainstay of the economy. The Swiss economy is strongly geared towards exports – as a percentage of GDP, its foreign trade is among the highest in the world. The EU plays a key role here, accounting for 63.7% of exports and 81.4% of imports. Small and medium-sized enterprises dominate the Swiss economic landscape. More than 99% of companies have

fewer than 250 full-time employees.

Total of companies in Switzerland 298,720 100%

large companies with more than 250 employees 1,028 0.3%

small and medium-sized companies with fewer than 250 employees

297,692 99.7%

Exporting companies 36,589 12.2%

with exports contributing less than 1⁄3 of turnover 21,344 7.1%

with exports contributing between 1⁄3 and 2⁄3 of turnover

6,568 2.2%

with exports contributing more than 2⁄3 of turnover 8,677 2.9%

Corporate landscape of SwitzerlandSource: Swiss Statistics

The Swiss economy in numbers

Exports (per country) in million CHFSource: Directorate General of Customs

Imports (per country) in million CHFSource: Directorate General of Customs

Total exports 2009 180,534 100 %

Europe 115,016 63.7 % European Union 109,130 60.5 % Germany 35,283 19.5 % Italy 15,455 8.6 % France 15,225 8.4 % United Kingdom 8,521 4.7 % Spain 6,506 3.6 % Russia 2,115 1.2 % Africa 3,596 2.0 % Asia 34,406 19.1 % Japan 6,824 3.8 % China 5,400 3.0 % The Americas 25,364 14.0 % United States 17,654 9.8 % Brazil 1,998 1.1 % Oceania 2,152 1.2 %

Total imports 2009 160,187 100 %

Europe 130,463 81.4 % European Union 128,630 80.3 % Germany 53,840 33.6 % Italy 17,922 11.2 % France 15,264 9.5 % United Kingdom 5,563 3.5 % Spain 3,714 2.3 % Russia 523 0.3 % Africa 1,748 1.1 % Asia 17,084 10.7 % China 5,139 3.2 % Japan 2,791 1.7 % The Americas 10,519 6.6 % United States 8,029 5.0 % Brazil 659 0.4 % Oceania 373 0.2 %

10.7%1.1%

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0.2 % 6.6%

2.0% 14.0 %

19.1 %63.7 %

1.2 %

20 21

Exports (per industry sector) in million CHFSource: Directorate General of Customs Average exchange rates in 2009: 1 EUR = 1.5100 CHF, 1 USD = 1.0868 CHF

Imports (per industry sector) in million CHF

Exports by sector in million CHF in % compared to previous year

Total 2009 180.534 – 12.50 %

Chemicals and related products 71,771 – 0.20 %

Machines, appliances, electronics 33,741 – 22.98 %

Precision instruments, watches and jewellery 32,407 – 14.69 %

Metals 10,489 – 31.34 %

Farm and forestry produce, fisheries* 8,262 – 2.28 %

Vehicles 5,343 – 12.33 %

Energy sources 5,296 – 18.68 %

Leather, rubber, plastics 4,171 – 19.78 %

Textiles, clothing, shoes 3,687 – 17.47 %

Paper, stationery and graphics products 2,938 – 18.39 %

Apartment furnishings, toys, etc. 1,560 – 20.23 %

Building materials 868 – 17.88 %

Imports by sector in million CHF in % compared to previous year

Total 2009 160,187 – 14.29 %

Chemicals and related products 34,964 – 8.64 %

Machines, appliances, electronics 29,250 – 17.86 %

Precision instruments, watches and jewellery 15,378 1.57 %

Vehicles 14,961 – 10.68 %

Farm and forestry produce, fisheries* 13,306 – 6.28 %

Metals 12,323 – 31.87 %

Energy sources 12,063 – 30.94 %

Textiles, clothing, shoes 9,042 – 9.95 %

Leather, rubber, plastics 5,810 – 12.17 %

Apartment furnishings, toys, etc. 5,237 – 10.66 %

Paper, stationery and graphics products 4,950 – 12.33 %

Building materials 2,903 – 9.08 %

The Swiss economy in numbers

23

22* incl. food, drink and tobacco

Copyright © SECO with input by Osec. June 2010.

Federal Department of Economic Affairs FDEAState Secretariat for Economic Affairs SECO

Federal Department of Economic Affairs FDEAwww.evd.admin.ch

State Secretariat for Economic Affairs SECOwww.seco.admin.ch

Further important economic actorsExport and location promotion (Osec) www.osec.chwith a list of Swiss Business Hubs worldwide

Federal Department of Foreign Affairs www.eda.admin.chwith a list of embassies and consulates

Swiss National Bank www.snb.ch

Federal Finance Administration www.efv.admin.ch

Swiss Statistics www.statistik.admin.ch

Federal Office for Migration www.bfm.admin.ch

Swiss Federal Customs Administration www.zoll.admin.ch

Swiss Business Association (economiesuisse)   www.economiesuisse.ch

International Knowledge Network (Swissnex) www.swissnex.ch

Switzerland Tourism  www.myswitzerland.com