Switzerland - Overview of economy
Switzerland, by all accounts one of the most prosperous and stable market economies in the world, has a gross domestic product (GDP) per capita of $27,100, roughly one-fifth higher than the average of the large Western European countries. Its per capita income remains the highest in Europe, even after a decade of comparative stagnation in the 1990s. Switzerland is traditionally considered a safe haven for foreign investors, because it has maintained political neutrality, an elaborate banking system with a high degree of bank secrecy, and it has maintained its currency's value through the instabilities of surrounding Europe's wars and crises. Switzerland is pursuing European Union (EU) membership only in the long run—over a ten-year period—because of the widely-held suspicions of many Swiss that effective involvement with the rest of Europe could jeopardize their unique economic stability. Yet the EU is by far its largest trading partner and Switzerland has signed several agreements to liberalize trade ties with the union. Switzerland has also brought its economy largely into conformity with EU regulations to improve its international competitiveness.
Swiss industries, notably engineering and machinery, electronics, metals, chemicals, and pharmaceuticals, are renowned for their precision and quality and contribute to more than half of the country's export revenues. In agriculture, Switzerland is self-sufficient for almost two-thirds of its food and exports several world-famous delicacies, yet it also imports about $6 billion worth of agricultural commodities annually. Its mostly small-scale farmers are among the most highly protected and subsidized producers in the world. Tourism, banking, and insurance are traditionally leading sectors in the economy. Swiss trading companies have good expertise in many parts of the world, such as eastern Europe, the Far East, Africa, and the Middle East. Switzerland has a well-developed tourist infrastructure and the Swiss themselves are keen travelers. The country is the seat of many international inter-governmental and private organizations, from the United Nations (UN) and its associated organizations, to CERN, the European Laboratory for Particle Physics (which gave birth to the World Wide Web), to the International Red Cross, and is also host to numerous multinational corporations .
In the late 1990s, the Swiss economy emerged from several years without growth caused primarily by the strong Swiss franc, which made its exports too expensive abroad. The overall slowdown in Europe, which also hurt tourism, was another barrier to exports. Following the depreciation of the franc in 1997 and the stronger economic conditions in Europe since, Swiss growth reached 2.3 percent in 1998, fell off to 1.54 percent in 1999, and then hit 3.43 percent in 2000. Unemployment peaked at 5.2 percent in 1997 and was reduced to less than 2 percent by 2000. Domestic consumer spending is an important factor keeping the economy in good shape, and competitive pressures in the European markets are supporting extensive domestic capital spending.
After Swiss voters, doubtful of the benefits of more intimate ties with their neighbors, rejected the framework European Economic Area (EEA, providing for closer cooperation as a possible introduction to EU membership) in a referendum in 1992, the Swiss federal government started negotiating separate bilateral sectoral agreements with the EU. An agreement covering several sectors (including land and air transport and agriculture) was signed in 1998. The federal government has declared its commitment to EU membership as a long-term goal, although it is opposed by many citizens who fear such results as harm to heavily subsidized Swiss agriculture by letting in cheaper EU foods, increases in unemployment by flooding the country with more guest workers, and damage to the environment from heavier truck traffic through Swiss territory.
Yet a substantial majority of 67.2 percent in 2000 backed, in a referendum pushed through by anti-European nationalist groups, a new package of bilateral agreements with the EU. Only 2 of the 26 cantons, Ticino and Schwyz, voted against the package. The Italian-speaking Ticino was concerned about the influx of workers from neighboring Italy, and Schwyz, a German-speaking conservative stronghold, had stood in the way of every pro-European initiative. The agreements, which include the introduction of free movement of people between the EU and Switzerland and the removal of existing administrative barriers to EU trucking through Swiss territory, are designed to compensate for the country's non-member-ship in the EEA, with which it conducts over two-thirds of its trade. The prudent Swiss have negotiated a number of opt-out clauses in case the inflow of EU citizens and trucks gets higher than expected.