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Successfully investing in Switzerland


last updated on 27 May 2020 | reading time approx. 4 minutes




How do you assess the current economic situation in Switzerland?

In 2019, Switzerland – a country with a population of nearly 8.57 million – achieved a per capita GDP of 70,500 United States dollar, adjusted for purchasing power, which is the world's top result (Germany: 55,600/USA: 65,000). However, overall 2019 GDP grew only by a moderate 0.9 per cent year-on-year (Eurozone: 1.2 per cent). Mainly the industrial sector contributed to that trend in 2019. Unlike in the previous year, the services sector recorded weaker growth. As in recent years, the chemical-pharmaceutical industry was a significant growth driver.


Positive growth was again observed in foreign trade in goods[1], which achieved an all-time high again in 2019. The growth was somewhat weaker compared to the previous year. Exports rose by 3.9 per cent to 242 billion Swiss franc (previous year: +5.7 per cent). After a very strong growth in the previous year (+8.7 per cent), imports rose by 1.6 per cent to 205 billion Swiss franc. The trade balance surplus again reached a remarkable level of 37 billion Swiss franc. As usual, this increase is mainly attributable to the chemical and pharmaceutical products in the case of which Switzerland generated a surplus of over 63 billion Swiss franc (previous year: 55 billion Swiss franc). By contrast, after several years of strong increases, foreign trade in services has moved into a consolidation phase.


Due to the current uncertainty because of Covid-19 , it is now difficult to forecast the 2020 GDP and all original forecasts have been adjusted. The Federal Expert Group currently (as of April 2020) estimates a decrease of as much as 6.7 per cent, assuming that the epidemiological situation stabilises. The important role of the pharmaceutical industry and its stability should somewhat counteract the negative trend.


Since mid-2016, the unemployment rate has been declining – and more and more rapidly at that. At the end of December 2019, after adjustment for seasonal and random changes, a total of just under 193,000 people were still registered for work search, which was a further decline of almost 5,000 compared to the corresponding period in 2018. At 2.5 per cent, the unemployment rate was a further 0.1 percentage points below the previous year. The current rise in unemployment figures is due to the aforementioned uncertainty: it is not foreseeable how quickly the labour market can recover from this.

How would you describe the investment climate in Switzerland?  Which sectors offer the largest potential?

The overall economic situation is currently expected to weaken in the coming months due the pandemic . Due to the dependence on exports to Germany and other euro countries, whose growth rates also declined, in some cases significantly, Swiss companies are also tending to hold back on long-term investments. Especially in the manufacturing sector, which is heavily dependent on exports – the mood is gloomy. However, as already mentioned, other sectors such as pharmaceuticals and chemicals are somewhat bucking the trend.


A decisive factor for Swiss exports in 2020 will be the exchange rate of the Swiss franc. Combined with falling orders, the further appreciation of the currency would be devastating for some sectors.


However, it should also be noted that this resource-poor country is in an excellent position to meet the challenges posed by digitisation. The Internet of Things enables introducing new products, services and business models, which will be increasingly in use – an opportunity for Switzerland as a location whose potential is not impaired by any unnecessary regulations. Also the pharmaceutical industry, the chemical industry, the health care and the social insurance systems as well as engineering generally still have enormous potential, while the watch industry and financial services will need to struggle with difficulties.

What challenges do German companies face during their business ventures into Switzerland?

The biggest challenge is the recruitment of qualified and reputed specialists. Particularly in view of the imminent demographic change and the related retirement of many specialists in the near term, Switzerland must find a way to close this gap. Above all, however, the lengthy negotiations with the EU on the joint framework agreement give rise to uncertainties that are difficult to assess. Given the economic, political and social stability, the challenges, however, should not discourage investors from venturing into Switzerland.
Practical experience shows that issues relating to cross-border activities – not only the very restrictive reporting obligations and minimum wage requirements but also the VAT differences between the EU and the Swiss customs territory (which includes Liechtenstein, for example) – should be clarified in greater detail.   

To what extent is the name “Crypto Valley” justified for Switzerland?

Thanks to its geographical location, business-friendly legislation, easy access to capital and – in particular – a decentralised organisation, Switzerland, and especially Zug, can stand out as an attractive location for block-chain companies. It should be specifically noted that in February 2018 FINMA became the first financial market supervisory authority in the world to publish guidelines on how to treat ICOs under financial market law. This interpretation is very technology-affine in the opinion of many stakeholders. The canton and the city of Zug are also actively involved in this area of business. By the end of 2019, over 800 companies, including Ethereum, Bitmain, Dfinity and Cardano, had their locations in Switzerland. The Libra Association, which intends to launch the new Libra currency (formerly FacebookCoin) in 2020, established its headquarters in Geneva in 2019. The 50 largest companies have a market value of over 20 billion Swiss francs. Therefore, the name “Crypto Valley”, which alludes to the Silicon Valley, seems to be fully justified. The Federal Council recognised the need to further increase legal certainty in this area and in the spring of 2019 launched a consultation on improving the framework conditions for block chain and distributed ledger technology (DLT).

In your opinion, how will Switzerland develop?

Switzerland will continue to maintain its attractiveness as a business and education location and its position as the “Innovation World Champion” thanks to technological progress. Since the country pursues a generally business-friendly policy, it can be assumed that Switzerland will remain a destination of choice for foreign investors even after the crisis. The Federal Council, which is currently focused on leading the country through and out of the crisis with the typically Swiss sound judgement and risk-oriented pragmatism, should also have this goal in mind.


[1] Excluding precious metals, gemstones, art objects and antiques


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Sebastian Repetz

Country Manager Switzerland at Rödl & Partner


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