- GDP (PPP):
- $548.5 billion
- 2.5% growth
- 1.9% 5-year compound annual growth
- $64,649 per capita
- Inflation (CPI):
- FDI Inflow:
Switzerland’s economic freedom score is 82.0, making its economy the 5th freest in the 2020 Index. Its overall score has increased by 0.1 point due to slightly higher scores for property rights and government integrity. Switzerland is ranked 1st among 45 countries in the Europe region, and its overall score is well above the regional and world averages.
The Swiss economy has been rated free for more than a decade. GDP growth has slowed in recent years because of risks from the escalating trade war between China and the United States, the rising Swiss franc, and the drastic economic slowdown in neighboring Germany.
Economic freedom is well established and institutionalized in Switzerland. Its lowest-scored Index indicator is government spending, but even there the federal government projected a 2019 budget surplus of 2.8 billion Swiss francs, more than double the initially budgeted amount. The draft 2020 budget that the government proposed in June 2019 features a surplus of 600 million Swiss francs.
Switzerland’s federal canton system of government disperses power widely. Executive authority is exercised by a seven-member Federal Council. Switzerland has a long tradition of openness to the world but jealously guards its independence and neutrality. Reflecting voters’ concerns about climate change, the Green Party surged to fourth place in October 2019 elections and overtook one of the parties in the coalition government, the Christian Democrats. Policy proposals are frequently subjected to referenda, including 2019 measures on gun control and the financing of the Swiss pension system. Switzerland has one of the world’s highest per capita GDPs and a highly skilled labor force. The economy relies on financial services, precision manufacturing, metals, pharmaceuticals, chemicals, and electronics.
Physical property rights and intellectual property rights are recognized and enforced. The court system is independent, competent, and fair. Commercial and bankruptcy laws are applied consistently and efficiently. The law provides criminal penalties for official corruption, and the government generally implements the law effectively. The government is free from pervasive corruption. Switzerland is ranked 3rd out of 180 countries in Transparency International’s 2018 Corruption Perceptions Index.
Cantonal-level taxation is more burdensome than federal-level taxation. The top federal personal income tax rate is 11.5 percent, and the federal corporate tax rate is 8.5 percent. The overall tax burden equals 28.5 percent of total domestic income. Government spending has amounted to 34.0 percent of the country’s output (GDP) over the past three years, and budget surpluses have averaged 0.4 percent of GDP. Public debt is equivalent to 40.5 percent of GDP.
The highly competitive business climate reflects strong regulatory efficiency and openness to free trade. Swiss public administration enjoys the highest public confidence of any national government in the OECD. Labor productivity is high outside of the heavily subsidized agricultural sector. Switzerland has few price controls, but the government intervenes if it finds monopolistic pricing and maintains price and margin controls for all agricultural goods.
The total value of exports and imports of goods and services equals 118.8 percent of GDP. The average applied tariff rate is 1.7 percent, and 152 nontariff measures are in force. The investment code is transparent and efficiently administered. The modern and highly developed financial sector provides a wide range of financing instruments. Banking remains well capitalized and sound.