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Economy of Switzerland - Essay Example

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Economy of Switzerland

The country's political environment too is characterized by a high degree of decentralization with adequate amount of autonomy and authority delegated to the 26 cantons (Datamonitor, 2007).
Macroeconomic indicators happen to be good measure of the economic development of a country as these measures keep track of the life-style of the citizens and the problems faced by them while trying to arrange for the living. Sound macroeconomic indicators help in strengthening the base for a lasting growth of a nation. Some of the macroeconomic indicators over the last couple of years can be summarized for the country as follows;
Gross Domestic Product (GDP) happens to be the key driver of macroeconomic conditions in a country. It is calculated as1 'the total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports'. Switzerland has seen consistent growth in its GDP over the years, but it appears that is not good enough for it to maintain its leading position amongst similarly placed nations. OECD (2007) in its survey, while lauding the high levels of GDP per capita for Switzerland, also expresses concern over the continuous erosion of Switzerland's relative position over the past decade. The report points out that while proper utilization of labor remains high, the productivity levels has dropped down in comparison to other developed economies like Germany, France, Denmark etc. The growth in real GDP for Switzerland over the period of 2001-2006 is as indicated in table-1
Table 1: Switzerland real GDP (Swiss francs billion), 2001-2006
Table-2: GDP per capita growth in Switzerland compared to major Eurozone countries, 2001-2006 and forecast 2007-11
Year
GDP (Swiss francs billion)
Growth (%)
Country
CAGR 2001-2006
CAGR 2007-2011
2001
423
1.1
Germany
0.9
1.0
2002
425
0.4
France
1.4
1.5
2003
424
-0.2
Italy
0.6
0.9
2004
434
2.4
Spain
2.9
4.1
2005
444
2.2
Switzerland
1.0
1.4
2006
457
3.0
Source: Datamonitor, U.S Census Bureau International Database, National Statistical Organization- Switzerland
CAGR 1.55%

Source: Datamonitor, National Statistical Organization- Switzerland


Even during the first two quarters of 2007 the GDP growth remained quite encouraging reaching 0.7% in each period, quarter on quarter (OECD, 2007). What is driving the growth is the acceleration in private consumption with an increase in the availability of more job opportunities and labour incomes. In fact in today's market driven economy what makes a big difference in the economic growth is the purchasing power of the workforce which sets a chain reaction in the form of more purchases, more production, and more contribution to the government in the form of taxes, more investments by the industry and expansion of the overall industrial outlook of the nation. Therefore, Switzerland seems to be preparing adequate ground for inviting more investments which obviously helps the government in shelling out more funds for infrastructure and social welfare sectors. For the year 2007 the GDP growth has been estimated around 2.5%, somewhat lower as compared to the 2006 figures but, in view of the global slowdown in economies this percentage appears good enough. The improvement in economic indicators is also on account of ...Show more

Summary

Switzerland a picturesque country, located the heart of Europe is generally known around the world as a dream destination for tourism purposes. Be it a married couple, a old couple re-living down the memory lane or a gala business conference, Switzerland marks the first entry as a purist destination for the purpose…
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