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Country risk of Switzerland : Economy

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.

 

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


 

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
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Main Online Newspapers
Swiss Info
Finews
Onlinenewspapers.com
Useful Resources
List of departments
Federal Department of Finance (FDF)
Federal Department of Environment, Transport, Energy and Communications (DETEC)
Federal Department of Home Affairs (FDHA)
Swiss National Bank (SNB)

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Latest Update: November 2022