|Despite a dearth of natural resources, the Swiss economy is among the
world's most advanced and prosperous. Per capita income is virtually the
highest in the world, as are wages. During most of the 1990s, the Swiss
economy was western Europe's weakest, with annual GDP growth averaging 0%
between 1991 and 1997. The economic recovery, however, which began during
the second half of 1997, has steadily gained momentum. The year 2000
registered the strongest GDP growth in a decade at 3.0% in real terms.
Being so closely linked to the economies of western Europe and the United
States, Switzerland has not been able to escape the slowdown being
experienced in these countries. In 2001 the rate of growth has fallen from
the highs experienced the previous year, and the economy was expected to
grow by about 1.6%. Economic growth is expected to be around 2.0% for
2002--the rate most economists see as the economy's average long-term
The economic stagnation experienced from 1991 to 1997 had a major impact on the labor market. Over this period, 255,000 jobs (aggregated as full-time job equivalents) were lost. To the surprise of most forecasters, however, the unemployment situation improved dramatically from a rate of 5.7% in February 1997 (the highest in decades) to 1.6% in June 2001. Since then unemployment has slightly increased to 2.6% in January 2002.
Trade has been the key to prosperity in Switzerland. The country is dependent upon export markets to generate income while dependent upon imports for raw materials and to expand the range of goods and services available in the country. Switzerland has liberal trade and investment policies and a conservative fiscal policy. The Swiss legal system is highly developed, commercial law is well-defined, and solid laws and policies protect investments. The Swiss franc is one of the world's soundest currencies, and the country is known for its high standard of banking and financial services.
A highly skilled, motivated work force, laws promoting labor flexibility, and collective bargaining agreements between trade unions and employers' associations have meant very little labor unrest. The machinery, metals, electronics, and chemicals sectors are world-renowned for precision and quality. Together they account for well over half of Swiss export revenues. In agriculture, Switzerland is about 60% self-sufficient and imports about $5 billion of agricultural products annually. Swiss farmers are one of the most highly protected and subsidized producer group in the world. The U.S. share of the Swiss agricultural import market is currently quite small, but the steady application of World Trade Organizations rules should gradually improve the situation.
Tourism, banking, engineering, and insurance are significant sectors of the economy and heavily influence the country's economic policies. Swiss trading companies have unique marketing expertise in many parts of the world, including eastern Europe, the Far East, Africa, and the Middle East. Not only does Switzerland have a highly developed tourism infrastructure (making it a good market for tourism-related equipment and services), the Swiss also are intrepid travelers themselves. On a per capita basis, more tourists visit the United States from Switzerland than from any other country. Tourism is the most important U.S. export to Switzerland (earnings almost $2 billion). In 2000, more than 400,000 Swiss went to the United States--and for the majority it was not their first visit.
According to the Swiss National Bank (SNB), Switzerland's current account surplus increased by $4.4 billion to $31.2 billion in 2000 (7.4 billion to 52.4 billion Swiss francs), equivalent to 12.9% of GDP--the highest such percentage among OECD countries. This represents a 16.5% increase over 1999's figure of $26.8 billion (45.0 billion Swiss francs), or 11.6% of GDP. In value terms, exports of goods rose by 10.6% and imports by 13.4%. The balance of trade showed a modest deficit of $1.25 billion (2.1 billion Swiss francs). The surplus from services increased by $1.7 billion to $13.5 billion (2.8 billion to 22.6 billion Swiss francs). Investment earnings from abroad rose by $5.2 billion to $28.0 billion (8.8 billion to 47.1 billion Swiss francs), due to improved net earnings on both portfolio and foreign direct investments.
The European Union (EU) is Switzerland's largest trading partner, and economic and trade barriers between them are minimal. 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 sectoral agreements with the EU. After more than 4 years of negotiations, an agreement covering seven sectors (research, public procurement, technical barriers to trade, agriculture, civil aviation, land transport, and the free movement of persons) was achieved at the end of 1998. Parliament officially endorsed the so-called "Bilaterals" in 1999, and the Swiss people approved them in a referendum in May 2000. The agreements, which had to be ratified by the European Parliament as well as legislatures in all 15 EU member states, are expected to come into force in the first half of 2002.
Switzerland has so far attempted to mitigate possible adverse effects of non-membership by conforming many of its regulations, standards, and practices to EU directives and norms. The Swiss Government has embarked on a second round of bilateral negotiations with the EU (known as Bilaterals II). Talks on the four dossiers of customs fraud, environment, statistics, and trade in processed agricultural products started in July 2001. Negotiations on the liberalization of services, pensions, student and youth exchange programs, media, the taxation of savings as well as police and judicial cooperation (under the Schengen and Dublin accords) are yet to begin. While most issues are not really contentious, talks on customs fraud are moving slowly. Police and judicial cooperation and the taxation of savings are controversial, mostly because of possible adverse effects on Swiss bank secrecy. Switzerland refuses to open negotiations on a tax on savings as long as the EU has not yet framed its mandate for negotiations for all 10 dossiers.
The Swiss federal government has declared EU membership as its long-term goal, but in a March 2001 referendum over 70% of voters rejected rapid steps toward EU membership. The issue of EU-membership is therefore likely to be shelved for several years. The government also formally declared that it wants Switzerland to join the United Nations. A popular initiative on UN membership, which the government endorses, will be voted on March 3, 2002.
Switzerland is a member of a number of international economic organizations, including the WTO, the IMF, the World Bank, and the OECD.
power parity - $207 billion (2000 est.)
SOURCES: The World Factbook, U.S. Department of State
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