Switzerland: Macroeconomic Country Outlook
- According to GlobalData, the Swiss economy is forecast to grow by 2.5% and household expenditure to expand by 3.5% in 2022.
- Switzerland ranked 1st out of 152 nations in the GlobalData Country Risk Index (GCRI) Q2 2022.
- Retail trade grew at an average annual rate of 4.1% in the first three months of 2022.
According to the Federal Department of Finance, Switzerland’s financial center contributed 9.0% of total GDP in 2021. The 243 banks and 195 insurance companies in the country employed 212,000 people (in full-time equivalents) in the same year. In the client custody accounts of banks in Switzerland, there are securities holdings amounting to $8.2 trillion, $4.0 trillion of which are from overseas.
Key findings
- Switzerland and the UK to work on a new trade deal: In April 2022, the UK announced to work on a new enhanced free trade agreement with Switzerland. The deal aims to boost the two-way trade between the UK and Switzerland and breaking down barriers and allowing UK firms to have access to the Swiss market. The aim of the deal is to increase cooperation in areas, including digital trade, innovative services, and green growth — delivering higher paying jobs across the country. Moreover, the deal also aims to support trade across important industries in the UK, including finance, legal services, consultancy and the tech sector. In 2021, the total trade between the UK and Switzerland amounted to $52.8 billion. Switzerland was the UK’s eight largest trading partner, accounting for 3% of total UK trade in 2021.
- Switzerland to host European space technology center: In May 2022, Switzerland signed an agreement with the European Space Agency (ESA) with an aim to host a center of excellence for developing space technology. The European Space Deep-Tech Innovation (ESDI) center will be set up at the Paul Scherrer Institute (PSI), a part of the leading Swiss technology establishment known as the ETH Domain. The MoU signed between the PSI and ESA aims to increase cooperation in areas, including material research, data management and processing, quantum technologies, and sustainable space ecosystems. Switzerland is a founding member of ESA and contributes approximately $189 million every year towards the organization’s programmes and activities.
- Switzerland ranked 36th out of 190 countries in the World Bank’s Ease of Doing Business ranking in 2020: According to the World Bank, Ease of Doing Business Report (2020), the country ranks 13th in getting electricity, 18th in registering property and 20th in paying taxes. As a result of a favorable business climate, Switzerland receives a large amount of foreign investment. A diverse and talented workforce, and superior research and development in the country further added to the country’s profile. However, the country still has areas to improve in terms of enforcing contracts and protecting minority investors.
- Switzerland and Indonesia to increase cooperation: In March 2022, the Swiss-Indonesian Chamber of Commerce (SwissCham Indonesia) and the Investment Coordinating Board (BKPM) signed a memorandum of understanding (MoU) with an aim to boost trade and investments between Switzerland and Indonesia. The MoU aims to increase cooperation between the two nations on issues, including investment policies, foreign direct investment, and innovation and knowledge transfer. In 2021, Switzerland was Indonesia’s 10th largest foreign investor with 281 projects amounting to $599.8 million. Investment projects were mainly across beverage, chemical and pharmaceutical companies.
- The country has a high level of human development: Switzerland has performed well on various human development indicators. According to UNDP, Human Development Report (2020), Switzerland ranked second out of 189 countries as compared to the seventh rank of Sweden, eighth rank of the Netherlands, and 13th rank of the UK. The country maintains good healthcare infrastructure for its population and has high level of life expectancy. According to GlobalData, life expectancy in the country stood at 83 years and literacy rate stood at 99% in 2021.
- Switzerland performed well on various governance indicators: Switzerland’s governance indicators are good, as the country is one of the leaders on the World Bank’s voice and accountability parameter in 2020 with a percentile rank of 98.6. This parameter measures the extent to which citizens of a particular country are able to participate in selecting their government and enjoy freedom of expression, freedom of association and availability of free media. Switzerland has preserved its tradition of direct democracy, where citizens are involved in framing of important legislation. In addition, the country ranked in excess of the 90 percentile on all other parameters of governance, such as political stability and absence of violence, government effectiveness, regulatory quality, implementation of the rule of law and control of corruption in 2020.
Key fundamentals
Sectoral outlook
- Tourism industry expected to witness a moderate recovery in 2022: Tourism is one of the main industries in Switzerland. According to the World Travel and Tourism Council, the tourism industry contributed 10.3% towards GDP in 2019, 5.3% in 2020, and 6.1% in 2021. The declining contribution of the sector towards GDP was mainly due to the outbreak of COVID-19 pandemic, which took place in 2020. In addition, the government had imposed domestic lockdowns and international travel ban. According to the Federal Statistics Office of Switzerland, the Swiss hotel sector registered 14.6 million overnight stays during the winter tourist season (November 2021 to April 2022), an increase of 54%, compared to the same period of the previous year. However, as Switzerland has removed all entry restrictions requirement to enter the country, GlobalData forecasts around 10.8 million international arrivals for the country in 2022, compared to 4.3 million international arrivals in 2021.
- Manufacturing sector expected to perform strong in 2022: In Q1 2022, the manufacturing sector played an important role in helping speedy economic recovery for the country. According to the Federal Statistics Office of Switzerland, the industrial turnover witnessed an overall rise of 11.1% in Q1 2022, compared to the same quarter of previous year. Moreover, the overall industrial production increased by 7.9% in Q1 2022, compared to the same quarter of 2021. Export orders, along with strong domestic demand for consumer goods, showed signs of improvement in early months of 2022.
- Support for renewable sector in Switzerland: As per Switzerland’s Energy Strategy 2050, the government aims to promote renewable energy, ban new nuclear power plants and lower energy consumption through 2035 and 2050. Under the strategy, the government wants to limit the annual per capita energy consumption by 43% and reduce electricity consumption by 13% through 2035. In order to ensure that enough renewable energy in supplied during winter months, the government aims to finance large storage power plants with a 'winter surcharge' of not more than 0.2 Swiss cents per kilowatt-hour on electricity consumption. Moreover, as the government plans to increase production from renewable and phase out nuclear energy, it aims to target an additional two terawatts of greener electricity output by 2040.
GlobalData Country Risk Index (GCRI) – Q2 2022
Switzerland ranked 1st out of 152 nations in the GCRI Q2 2022. The country’s score is in the very low risk nations band (below 30). Switzerland’s overall risk score is lower than the Western Europe and world average. Switzerland’s stable political situation and prudent macroeconomic policies have attracted investors from all over the world. The flexible labor market and favorable business environment further make doing business easier for investors.
GCRI Methodology
GlobalData’s unique Country Risk Model determines the existing and future level of country risk by assessing various qualitative and quantitative factors. The index is designed to help firms formulate their global business strategies based on historical developments in an economy.
The Country Risk Index incorporates the latest available macroeconomics, political, social, technological, environmental, and legal data from a range of recognized national and international statistical sources and incorporates proprietary data from GlobalData. West European nations in this publication include Switzerland, Sweden, Finland, Germany, Denmark, Iceland, the Netherlands, Austria, Norway, Ireland, the UK, Switzerland, Luxembourg, France, Italy, Spain, Greece, and Portugal.
About the report
GlobalData Macroeconomic Outlook report is designed to provide detailed macro-economic analysis which will help clients in their business planning, investment and strategic decisions, and analysis. It also provides a quick view of the current situation and the risk score of the country in comparison to region and world based on the proprietary risk framework. The report also highlights key strengths, weaknesses, opportunities, and threats in each of the pillars of PESTLE, economic growth prospects, and key events which can impact the country’s future outlook.
More details: Macroeconomic Outlook Report: Switzerland
Still looking?
Don’t wait - discover a universe of connected data & insights with your next search. Browse over 28M data points across 22 industries.
Explorer
Access more premium companies when you subscribe to Explorer