2020 Index of Economic Freedom

Switzerland

OVERALL SCORE82.0
WORLD RANK5
Rule of Law

Property Rights87.4

Judicial Effectiveness81.5

Government Integrity90.1

Government Size

Tax Burden70.1

Government Spending65.3

Fiscal Health96.7

Regulatory Efficiency

Business Freedom74.2

Labor Freedom72.4

Monetary Freedom84.4

Open Markets

Trade Freedom86.6

Investment Freedom85.0

Financial Freedom90.0

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Quick Facts
  • Population:
    • 8.5 million
  • GDP (PPP):
    • $548.5 billion
    • 2.5% growth
    • 1.9% 5-year compound annual growth
    • $64,649 per capita
  • Unemployment:
    • 4.9%
  • Inflation (CPI):
    • 0.9%
  • FDI Inflow:
    • $-87212.1 million

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.

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Background

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.

Rule of LawView Methodology

Property Rights 87.4 Create a Graph using this measurement

Judicial Effectiveness 81.5 Create a Graph using this measurement

Government Integrity 90.1 Create a Graph using this measurement

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.

Government SizeView Methodology

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.

Regulatory EfficiencyView Methodology

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.

Open MarketsView Methodology

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.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Switzerland820.1
2Ireland80.90.4
3United Kingdom79.30.4
4Denmark78.31.6
5Estonia77.71.1
6Georgia77.11.2
7Iceland77.10.0
8Netherlands770.2
9Lithuania76.72.5
10Luxembourg75.8-0.1
11Finland75.70.8
12Sweden74.9-0.3
13Czech Republic74.81.1
14Germany73.50.0
15Norway73.40.4
16Austria73.31.3
17Latvia71.91.5
18Armenia70.62.9
19Bulgaria70.21.2
20Cyprus70.12.0
21Romania69.71.1
22North Macedonia69.5-1.6
23Malta69.50.9
24Azerbaijan69.33.9
25Poland69.11.3
26Belgium68.91.6
27Slovenia67.82.3
28Kosovo67.40.4
29Portugal671.7
30Albania66.90.4
31Spain66.91.2
32Slovakia66.81.8
33Hungary 66.41.4
34France662.2
35Serbia 662.1
36Turkey64.4-0.2
37Italy63.81.6
38Bosnia and Herzegovina62.60.7
39Croatia62.20.8
40Moldova622.9
41Belarus61.73.8
42Montenegro61.51.0
43Russia612.1
44Greece59.92.2
45Ukraine54.92.6
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