Introduction
Switzerland is one of most prosperous economies of the world. Switzerland is a tiny nation with a tiny population but people are skilled, talented and hard working. This central European nation is a landlocked nation and it has limited natural resources. Switzerland is a model for other nations of the world and they can learn from Switzerland how a nation with limited resources can lodge its remarkable presence among other prominent countries of the world. This paper intends to discuss economy of Switzerland and delves deep in order to examine economic conditions, major issues and several other related aspects of the Swiss economy.
Overview
Switzerland is very prosperous economy with very skillful people. The country has a high GDP like other rich economies of the world and has very low unemployment rate. Swiss economy gets profit of well established service sector that is primarily led by financial markets as well as a manufacturing sector that is known for producing advanced technology ad knowledge based products. Economic as well as political stability of Switzerland, impartial judicial system, excellent infrastructure, and well-organized financial market, along with nominal corporate taxes contribute in making Switzerland standing with world’s richest economies. Switzerland works in agreement with European Union in order to expand its international horizons, competitiveness with some protections for country’s little agricultural segment.
Neighboring countries of Switzerland, that are part of European Union, are major trade partners of Switzerland and these countries purchase more than half of all exports of Switzerland. Switzerland easily overcame economic crisis and economic slowdown of years 2008 and 2009. Swiss national bank applied a zero interest strategy in order to boost the Swiss economy and to stop appreciation of its currency. Debt crisis of neighboring nations is a major concern for the economy of Switzerland in recent times. Switzerland currently faces pressure from neighboring and other countries like United States of America to amend its economic policies and especially related to banking privacy laws. Swiss government has agreed to review and amend it policies on secrecy laws, tax laws and this step is going to affect the Swiss economy in a substantial manner (Federal Department of Foreign Affairs).
GDP Growth Rate
Gross Domestic Product of Switzerland registered an increase of 0.5 percent in 3rd quarter of current year. In last three quarters of 2013 Country registered good growth in GDP due to positive contribution from trade balance, private consumption and investment in infrastructure. Since 1980 till today Switzerland’s average GDP growth rate is 0.4 %. So far the highest GDP growth rate registered by the country is 1.9 % in Dec. 1999, whereas the lowest GDP growth rate registered by the country is -2.2 % in Dec. 2008. Switzerland has strong economy with highest per capita GDP in the world. Effective long-term economic policies and privacy policies of Swiss banks make country a safer place for foreign investments. Swiss economy is dependent on trade and different industries for livelihood. Below given chart is showing GDP growth rate of Switzerland for past few years (Gyorffy).
Unemployment
Unemployment rate in the country registered an increase; the current unemployment rate of country is 3.10 %. Country has around 188 thousands unemployed people which show an increase of 5.6 % over the last year. Since 1995 till today Switzerland’s average unemployment rate is 3.4 %. Country registered highest unemployment rate of 5.4 % in 1997 whereas the lowest unemployment rate registered by the country is 1.6 percent in year 2000. In Switzerland unemployment rate is calculated by dividing number of people who are looking for employment from total working people. Below given chart is presenting unemployment rate of Switzerland for past few years (Gyorffy).
Inflation
During last month Switzerland registered inflation rate of -0.3 percent. In the country inflation rate reflect rise and drop in the prices of products that customers pay while purchasing the products. Since 1956 till today the average inflation rate of Switzerland is 2.6 %. The country registered highest inflation around 12 percent in year 1973 whereas registered lowest inflation rate -1.4 % in year 1959. This year country register decrease in prices of products such as clothing, footwear, transportation, healthcare and household goods whereas an increase is registered in prices of goods such as alcohol, tobacco products and restaurants & hotels. Below given chart is presenting inflation rate of the Switzerland for past few years (Gyorffy).
Government spending surplus
Deficit or surplus in government spending refers to collection by the government in form of taxes and other revenues and spending it on people in different welfare schemes and planning, or any other obligation towards the people. Government collects the taxes and is expected to spend that amount in the interest of people. Swiss government collects taxes and the amount that is collected is higher than the amount that is spent on Swiss people. Swiss government is thus in the surplus and utilizes this amount in different schemes or in debt paying that benefits the people of Switzerland. In the year 2012, Swiss government spending surplus was almost 0.7 percent.
Primary Products and Services
Switzerland is well known for export of high quality products such as watches, clocks, army knives, chemical products, metals and food & beverage items. Some other products such as jewelry, machineries and precision instruments also contribute in export of the country. Pharmaceutical products and chemicals formed significant portion of country’s export. All these goods are primary products of country.
Trade Balance
Switzerland is not blessed with natural resources however the country has most prosperous economy. Per capita income of country is higher than superpower of the world. Switzerland depends upon export to generate revenue and on import to procure raw materials. The country has export of USD 312.5 billion in year 2011 and import of USD 294.1 billion. Country has trade surplus due to its liberal trade policies, excellent agriculture and conservative monetary policy.
Exports and Imports Products
The country has good skilled labor force that helps country in manufacturing high quality products. These products are exported to other countries and Switzerland earns very handsome revenue in lieu of these exported materials. These products include Swiss watches, jewellary, medical equipments, vaccines, and several other edible products like, chocolate, cheese and wines. Main import materials that Switzerland imports from other countries are fossil fuels, chemicals, machinery, metals, cars, vehicles, foot wears, leather, rubber, clothes, aircrafts etc. Switzerland enjoys a trade benefit in its trade and export-import ratio is in the interest of the country.
Major Trading Partners
Germany, Italy, United States of America, France, England, Japan, Austria, Netherlands, Ireland and Belgium are major trading partners of Switzerland. Switzerland trades with these countries and as per requirements of Swiss people, increases or decreases its exports and imports. Apart from the countries, above mentioned, Swiss goods are in demand in several other parts of the world where Switzerland exports its goods and earns good revenue.
Current and proposed Swiss policy
Swiss national bank and Swiss government are planning to introduce some very significant changes in policies that are related to national interest of Switzerland. These policies are majorly intended to bring changes in environment, health, education and security of the Swiss people. Among current issues, health and education are on the priority while in proposed policies, safety and security of Swiss people is on the priority. Growing incidents of terrorism has forced authorities to take some major steps in order to protect Swiss from such threats. People from different sects of the society are raising their voices to improve the internal and border security in order to prevent any threats to the people. Swiss government has asked the authorities to make a layout for improving the security and checking any kinds of threat.
Conclusion
After having observed the economy of Switzerland and other related aspects, it can be concluded that Swiss economy is one of richest economies of the world. Swiss economy is flourishing because of skilled and determined people of Switzerland. Swiss trade is in the interest of the nation and export import ratio of Switzerland is in favor of Swiss economy. Richness of Swiss economy contributes in the happiness and satisfaction of Swiss people and they are some of happiest peoples of the world.
Works Cited
"Federal Department of Foreign Affairs." swissworld. 30 November 2013 <http://www.swissworld.org/en/economy/>.
Gyorffy, Krisztina. "Trading Economics." November 2013. tradingeconomics. 30 November 2013 <http://www.tradingeconomics.com/switzerland/inflation-cpi>.
