Switzerland flag Switzerland: Economic outline

Economic Outline

Economic Indicators

For centuries Switzerland has adhered to a policy of armed neutrality in global affairs, which has given it the access and political stability to become one of the world's wealthiest countries, with an efficient market economy. Its standard of living, industrial productivity and quality of education and healthcare systems are among the highest in Europe. The Swiss economy was relatively resilient throughout the pandemic, thanks to its specialisation in the financial sector and in the chemical and pharmaceutical industries. After growing 2.7% the previous year, the country’s GDP recorded a modest increase of 0.9% in 2023 as the tight monetary policy adopted to fight inflation curbed investment spending. Moreover, manufacturing production was affected by sluggish demand from trading partners, impacting exports, whereas household consumption remained relatively strong. Real GDP is projected to grow by 1.8% in 2024 and 1.2% in 2025 (IMF), as consumption growth is likely to be hampered by weakened household purchasing power. A rise in rent, correlated with the increasing mortgage reference rate, and elevated electricity prices in the domestic retail market at the start of 2024 are poised to drive up consumer prices.

The public accounts registered a tiny surplus in 2023 (+0.1% of GDP). Despite a notable increase in tax revenues and a reduction in expenses related to the integration of Ukrainian refugees, the public budget surplus was constrained by the outlay on the public transportation system and a subsidy for public employees to counteract inflation. In 2024, there is an expectation that the measures aimed at mitigating inflation's impact on households will be eased, potentially resulting in a larger surplus (0.4% as per the IMF projections). Meanwhile, the debt-to-GDP ratio decreased to 39.5% in 2023 (from 40.9% one year earlier) and is expected to follow a downward trend over the forecast horizon (37.7% this year, with a further decline to 36.4% in 2025). Despite the tense global situation, inflation in Switzerland remained modest by international standards: in 2023, headline inflation was estimated at 2.2%, partially pushed by rises in rents and electricity prices. Monetary policy should remain tight to ensure that inflationary pressures subside. The IMF forecasts inflation at 2% this year and 1.7% in 2025, reaching the Central Bank’s 2% target, although the challenging international environment is likely to exert increasing pressure on the more cyclical segments of export-oriented industries. Switzerland remains high atop the list of preferred tax havens due to its low taxation of foreign corporations and individuals. The flow of overseas wealth to the country has come in for much criticism in past years, due to concerns over tax evasion. However, after signing an agreement on the automatic exchange of information with the European Union, Switzerland put an end to bank secrecy. Since then, Swiss banks have been required to share their clients' information with foreign tax authorities.

Unemployment remained low in 2023 - at 2.2% - and should be stable in the near term. Boosting participation in the labour market, particularly among mothers and older workers, would help reduce labour shortages. Overall, Switzerland is one of the wealthiest countries in the world, with a GDP per capita (PPP) estimated at USD 89,537 in 2023 by the IMF. Nevertheless, according to the latest data available from the Federal Statistical Office, 8.7% of the Swiss population is affected by income poverty.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 818.47905.68977.951,025.311,083.07
GDP (Constant Prices, Annual % Change) 2.70.91.81.21.8
GDP per Capita (USD) 93,657102,866110,246114,725120,285
General Government Balance (in % of GDP) 0.80.10.40.30.2
General Government Gross Debt (in % of GDP) 40.939.537.736.435.0
Inflation Rate (%) n/a2.22.01.71.5
Unemployment Rate (% of the Labour Force) 2.22.12.32.42.4
Current Account (billions USD) 83.4672.5578.4278.4286.67
Current Account (in % of GDP) 10.28.08.07.68.0

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Swiss Franc (CHF) - Average Annual Exchange Rate For 1 ZAR 0.070.070.070.070.06

Source: World Bank, 2015

 

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Latest Update: April 2024