Switzerland is known for having one of the most advanced free-market economies globally. The service sector has significantly boosted the economy of the country. The leading industries in the country are banking and tourism markets. In 2015, Switzerland was ranked first in the entire world based on the Global Innovation Index, while in 2020, it has been ranked third by the Global Competitive Report. Furthermore, a study conducted by the United Nations in 2016 showcased that Switzerland is the third most prosperous country globally among landlocked nations; Liechtenstein and Luxembourg are taking the first and second positions, respectively (Guex & Guex 2020).
Switzerland is a nation that embraces neutrality and has a modern market economy. The level of employment in the country is minimal, while its labor force is very skilled. The nation benefits due to its robust service sector championed by the financial and manufacturing industries. These industries focus on developing and using high-level technology and knowledge-based production (Kalogeraki, Papadaki & Pera Ros 2018).
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Its well-performing manufacturing industry was established in the 18th century. Due to the lack of enough land, landless citizens were forced to take jobs in textile and clock making firms. The rise of the industrialization period in the 19th century saw the Swiss economy advancing with significant push due to mechanization in the textile industry. Since then, the textile and watch industry has continued to grow into one of the world’s best (Kalogeraki, Papadaki & Pera Ros 2018).
The banking and service sector has continued to be a pillar for the nation’s economy due to the presence of excellent financial authorities and regulators. The central bank of Switzerland’s primary goal is guaranteeing that there is price stability. It is also accountable for different kinds of economic development (Guex & Guex, 2020). Due to the presence of a stable economy marked by constant GDP growth, the citizen’s benefit a lot; a reason for their high standards of living.
Switzerland recorded a GDP of 703.8 billion in 2019. 74% of the GDP comes from the service sector, while 25% of the GDP. The agricultural industry only produces around 1% of the country’s GDP. It majorly trades within the European Union (EU). The majority of its imports, approximately 80%, comes from the EU. Around 40 percent of its exports are also exported to European Union nations. In entire Europe, Switzerland has the lowest value-added tax rate. 8% of the tax is imposed on goods and services while 3.8 percent is levied on accommodation services. Only 2.5% of the tax is charged on the necessities used daily by Swiss citizens (Kalogeraki, Papadaki & Pera Ros 2018).
The nation’s highly skilled labor sums up to around 5 million skilled laborers. The majority of the companies in Switzerland are small and medium enterprises (SMEs). Moreover, it has low public debts and a low rate of unemployed people. The top five leading industries in the nation are the service sector, banking, agriculture, tourism, and agriculture. Top exports by Swiss companies are gold, vaccines, jewelry, and packaged medicaments.
According to Moody’s analytics, the Swiss Consumer Price Index (CPI) has been continuously rising in the country. In 2019, the CPI was standing at 101.2 while in 2020, it grew to 101.25. On the other hand, the Producer Price Index (PPI) has also been increasing. In 2019, the PPI was 98.14, while in 2020, it rose to 98.26 on a monthly frequency (Guex & Guex 2020).
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