An investment in Switzerland is making a decision to align oneself with a nation that has been one of the most successful nations in Europe and in the world. Switzerland has been at peace since 1815 and has been mostly well-situated during the last two centuries. The success of the Swiss is based on creating niche markets where they excel. The country of Switzerland has remained an island of stability for investors through many economic and fiscal disruptions over the years. The nation of Switzerland has one of the world’s most stable economies. The Swiss have accumulated vast wealth over the years of order and prosperity. It is truly one of the treasure chests of Europe.
Switzerland has been awarded the distinction of being the most innovative country in the world in 2014. The country has maintained this status for 4 years in a row as measured by the Global Innovation Index.
In the Ease of Doing Business Rank Switzerland comes in at 28.
This mountainous country located in the middle of Europe leads in knowledge and technology output and ranks second behind Iceland in creative output this year. The robust business and market environment has attracted hefty international investment for generations. The Swiss long term policy of monetary conservatism and stability have made the country a safe haven for investors. As a result there has been a steady inflow of foreign investment.
The Swiss are a world leader for business competitiveness. The country is not burdened with the European community obligations and regulations in labor and investment. The country rejected membership in EEC (European Economic Community) in 1992. The country possesses an excellent education system and more than adequate healthcare which allows an investor to access a highly skilled and trained workforce. The labor productivity of the workforce is one of the highest in Europe. The somewhat competitive tax system provides further incentive to invest there. Travelers and business people alike have observed the high quality of life for the citizens of the country.
Switzerland is a rather small nation in size and population. The total area of the country is 41,285 km2 (15,940 sq mi) ranking it 135th. The population of the country is a bit over 8 million. It ranks 96th in the world.
The tiny size of Switzerland and it’s high degree of labor specialization have made the country quite dependent on industry and trade over time. Increasingly the service sector has come to represent one of the best ways for the country to maintain on of the highest standards of living in the world. The frugal Swiss have maintained a balanced budget. Low inflation (-0.7%) and unemployment (2.9%) are hallmarks of this vibrant economy.
Switzerland ranks number 2 behind Norway in terms of nominal and Purchasing Power Parity (PPP) in Europe. The Gross Domestic Product (GDP) in PPP stands at $363.4 billion USD (United States Dollar). It is the 37th largest economy in PPP. Per capita that equates to $45,418 USD. That is the 8th highest in the world.
In the 2014 Index of Economic Freedom, Switzerland ranks 4th with a score of 81.6% after the nations of Hong Kong, Singapore and Australia respectively. In Europe it ranks number 1. Its grade is 0.6 points higher than last year, with improvements in the freedom of trade and public spending. It is important to note that correspondingly, that there has been a slight decline in labor and monetary freedom. The overall rating for Switzerland has increased 4.8% since 1996.
In Switzerland there is little issue with corruption. There is a fair and independent judicial system throughout the country. Individual and corporate property rights are strongly enforced. There is little government interference in this area. Bankruptcy and commercial laws and regulations are applied consistently and fairly with a great deal of efficiency.
Although the country has some of the highest agricultural subsidies in the world the rest of the economy is allowed to operate with a minimum of government intervention. This is especially true in the sectors of the economy dominated by small businesses and companies.
The cost of hiring a worker beyond the salary itself is moderate and not onerous in regulation. This is official government policy to give encouragement to entrepreneurial activity in business.
Switzerland has open markets with the only notable exception being in agriculture. The average tariff rate is 0%. Foreign investment is not regulated. An investor from abroad can be expected to be treated like a domestic one.
One of the premier industries of the country is banking and financing. There are a wide range of financial products available and the banks are well capitalized.
Only in taxes are there some question to competitiveness. The federal corporate rate is quite reasonable at 8.5% but the local tax (canton level) can bring the total burden up to 24%. The top federal income tax rate is only 11.5% but with other taxes the total load can reach 41.5%. However, the overall tax burden is only 28.5% of GDP. For Europe that is not excessive.
Switzerland has the 20th largest economy in the world in nominal GDP. The economy is expected to grow by 1.7% this year. The nominal GDP is estimated for 2014 to be $693.532 billion USD. Per capita that works out to be $86,145 USD. That is the 4th highest in the world.
The GDP by sector is services with 71% of the total followed by industry at 27.7%. Agriculture is tiny in relation to the rest of the economy at just 1.3%. The labor force at 5 million follows a similar pattern in employment.
The main industries of the country include banking, chemicals, insurance, machinery, precision instruments, textiles, tourism, and watches. It is also known for its chocolate and clocks.
The main export partners of Switzerland are Germany with 19.8% of the total. Next is the United States with 11.1% of all exports. Next are Italy, France and the United Kingdom at 7.2%, 7.1% and 5.4% respectively. The major products exported are agricultural items, chemicals, machinery, metals and watches. The total revenue generated was estimated to be $308.4 billion USD in 2012.
The major import partners of Switzerland are Germany with 29.7% of the total followed by Italy with 10.2%. France, The United States, China and Australia follow with 8.4%, 5.6%, 5.6% and 4.2% respectively. The total value of the goods imported was $287.7 billion USD in 2012. Major products imported include agricultural items, chemicals, machinery, metals, textiles and vehicles.
As one can clearly, Switzerland runs a comfortable trade surplus.
At the beginning of 2013, Switzerland had accumulated $634.3 billion USD in Foreign Direct Investment.
The Gross External Debt was estimated at $1.346 trillion by the first half of 2011.
Public debt was estimated at 46.7% of GDP in 2012. Revenues for that year were estimated at $212.7 billion USD and expenses were $211.1 billion USD. A small surplus is indicated.
Foreign Reserves at the beginning of 2012 stood at $331.9 billion USD.
The Credit Ranking of Switzerland is AAA across the board and the outlook is stable both domestically and internationally.
Switzerland is known for several major corporations of world standing that include the pharmaceutical giants of Novartis and Roche and Nestle in food processing. Sika AG is well respected for chemicals in construction and industry. Sarnafil is best known for roof coating chemicals.
Most of the people in the country are employed by small and medium-sized industries. Many of these companies are involved in the areas of high technology which include biotechnology and micro-technology.
If an investor is looking for a moderately growing economy in Europe, with a stable currency(the Swiss franc) and a government that encourages business and investment, Switzerland might well offer a good investment opportunity.