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Switzerland Economy

By: EconomyWatch Content Date: 18 March 2010

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Switzerland, a landlocked country, is located in Western Europe, bordered by Italy to the south, Germany to the north, France to the west, and Liechtenstein and Austria to the east. The nation, despite occupying a small geographical area, has a sizeable population of 7,604,467, according to CIA 2009 estimates. Of this, the size of the labor force is 4.08 million, with the majority being concentrated in the services sector of Switzerland’s economy.

Switzerland Economy: Snapshot

The Swiss economy is highly modern and diversified, supported by an efficient legal framework. The nation has become one of the most flexible and competitive economies in the world due to its openness to international trade and investment. Despite major reliance on the financial industry, Switzerland has succeeded in surviving the global financial meltdown relatively unscathed.

Some key features of the Swiss economy and government that have enabled in creating a dynamic entrepreneurial environment and maintaining a favorable economic position are:

Low average tariff rate
Flexible labor market
Low government intervention
Stable inflationary pressures
Easy access to sources of credit
Relatively corruption-free judicial system

The following key indicators of Switzerland’s economy are reflective of its favorable position:

Economic Indicator	Value
GDP (Official Exchange Rate)	$484.1 billion
GDP Per Capita (Purchasing Power Parity)	$41,600
Unemployment Rate	3.7%
Total Exports	$190.1 billion
Total Imports	$177.2 billion

(Source: CIA World Factbook, 2009)

Switzerland’s GDP growth over the past few years is illustrated below:

Switzerland’s GDP growth 2009

Foreign Investment in Switzerland Economy

Switzerland is regarded as one of the most investment-friendly nations in the world, with a multicultural society that has four official languages. Most sectors of the Swiss economy are open to foreign investment, with minimal limitation on repatriation of profits. The Competition Commission of Switzerland only reviews foreign investments when it reaches a certain level. Besides, the nation’s bank secrecy and monetary security policies have made it a desired haven for investors.

Developed nations are the key partners of Switzerland’s FDI, with the US as the main investor and destination for FDI stock. The Netherlands and Germany are other principal FDI partners of Switzerland, and collectively the three nations account for 70% of Switzerland’s incoming FDI.