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Balance Of Payments of Switzerland in the subject Economics of Global Trade & Finance



I Afra S. Mukadam student of Mcom Part-1, Roll number, 3821 hereby declare that the project for the Paper Economics of Global Trade & Finance titled,Balance of Payments of SwitzerlandSubmitted by me for Semester 1 during the academic year 2013 2014, is based on actual work carried out by me under the guidance and supervision of Prof. Rinkoo Shantnu.I further state that this work is original and not submitted anywhere else for any examination.

EVALUATION CERTIFICATEThis is to certify that the undersigned have assessed and evaluated the project on Balance of Payments of Switzerland submitted by Afra S.Mukadam Student of MCom Part-1.This subject is original to the best of our knowledge and has been accepted for Internal Assessment.


FIRST NAME: AfraMCom Part-1


FATHERS NAME: Sharfuddin

SURNAME: Mukadam

Subject: Economics of Global Trade & Finance

Topic for the Project: Balance of Payments of Switzerland.ParticularsMarks AwardedSignature

DOCUMENTATIONInternal Examiner(Out of 10 marks)

External Examiner(Out of 10 marks)

Presentation(Out of 10 marks)

Viva and Interaction(Out of 10 marks)

TOTAL MARKS (Out of 10 marks)

INDEXS.NoParticularsPg No.

1.Chapter 1 - Introduction6 8

2.Chapter 2 Economy of Switzerland9 11

3.Chapter 3 - Balance of Payments in Switzerland12 16

4.Chapter 4 Comparison of Last Five Years17 20

5.Chapter 5 - Conclusion21 24


Balance of payments(BoP) accounts are an accounting record of all monetary transactions between a country and the rest of the world.[1]These transactions include payments for the country'sexportsandimportsofgoods,services,financial capital, andfinancial transfers. The BOP accounts summarize international transactions for a specific period, usually a year, and are prepared in a single currency, typically the domestic currency for the country concerned. Sources of funds for a nation, such as exports or the receipts ofloansandinvestments, are recorded as positive or surplus items. Uses of funds, such as for imports or to invest in foreign countries, are recorded as negative or deficit items.When all components of the BOP accounts are included they must sum to zero with no overall surplus or deficit. For example, if a country is importing more than it exports, its trade balance will be in deficit, but the shortfall will have to be counterbalanced in other ways such as by funds earned from its foreign investments, by running down central bank reserves or by receiving loans from other countries.While the overall BOP accounts will always balance when all types of payments are included, imbalances are possible on individual elements of the BOP, such as thecurrent account, thecapital accountexcluding the central bank's reserve account, or the sum of the two. Imbalances in the latter sum can result in surplus countries accumulating wealth, while deficit nations become increasingly indebted. The term "balance of payments" often refers to this sum: a country's balance of payments is said to be in surplus (equivalently, the balance of payments is positive) by a specific amount if sources of funds (such as export goods sold and bonds sold) exceed uses of funds (such as paying for imported goods and paying for foreign bonds purchased) by that amount. There is said to be a balance of payments deficit (the balance of payments is said to be negative) if the former are less than the latter.Under afixed exchange ratesystem, the central bank accommodates those flows by buying up any net inflow of funds into the country or by providing foreign currency funds to theforeign exchange marketto match any international outflow of funds, thus preventing the funds flows from affecting theexchange ratebetween the country's currency and other currencies. Then the net change per year in the central bank's foreign exchange reserves is sometimes called the balance of payments surplus or deficit. Alternatives to a fixed exchange rate system include amanaged floatwhere some changes of exchange rates are allowed, or at the other extreme a purelyfloating exchange rate(also known as a purelyflexibleexchange rate). With a pure float the central bank does not intervene at all to protect or devalue itscurrency, allowing the rate to be set by themarket, and thecentral bank's foreign exchange reservesdo not change.Historically there have been different approaches to the question of how or even whether to eliminate current account or trade imbalances. With record trade imbalances held up as one of the contributing factors to thefinancial crisis of 20072010, plans to address global imbalances have been high on the agenda of policy makers since 2009.Theeconomy of Switzerlandis one of the world's most stable economies. Its policy of long-term monetary security and political stability has madeSwitzerlanda safe haven for investors, creating an economy that is increasingly dependent on a steady tide offoreign investment.Because of the country's small size and high labour specialization, industry and trade are the keys to Switzerland's economic livelihood. Switzerland has achieved one of the highest per capita incomes in the world with low unemployment rates and a balanced budget. The service sector has also come to play a significant economic role.

Population: 8.0 millionGDP (PPP): $363.4 billion , 1.0% growth , 1.2% 5-year compound annual growth , $45,418 per capitaUnemployment: 2.9%Inflation (CPI): -0.7%FDI Inflow: $3.6 billion

Switzerlands economic freedom score is 81.6, making its economy the 4th freest for the first time ever in the 2014 Index. Its score is 0.6 point higher than last year, with improvements in trade freedom and the management of public spending partially offset by declines in monetary freedom and labour freedom. Switzerland is ranked 1st out of 43 countries in the Europe region.Switzerland was first graded in the 1996 Index and its economic freedom score has advanced since then by 4.8 points. Improved ratings for six of the 10 economic freedoms, led by the sound management of public spending and notable enhancements in the area of market openness as measured through trade freedom and financial freedom, have enabled Switzerland to advance to economically free since 2010.As reflected in the steady rise of its economic freedom over the 19 years it has been graded, Switzerlands strong competitiveness is built on flexibility and openness. The sound regulatory environment encourages entrepreneurial activity and innovation. Banking regulations and lending practices are prudent and sensible. The judicial system, independent and free of corruption, provides strong protection of property rights.

In the 1940s, particularly during World War II the economy profited from the increased export and delivery of weapons to the German Reich, France, Great Britain, and other neighbouring and close countries. However, Switzerland's energy consumption decreased rapidly.This is a chart of trend of gross domestic product of Switzerland at market prices estimateby the Swiss Government with figures in millions of Swiss Francs.YearGross Domestic ProductUS Dollar Exchange

1980184,0801.67 Francs

1985244,4212.43 Francs

1990330,9251.38 Francs

1995373,5991.18 Francs

2000422,0631.68 Francs

2005463,7991.24 Francs

2006490,5451.25 Francs

2007521,0681.20 Francs

2008547,1961.08 Francs

2009535,2821.09 Francs

2010546,2451.04 Francs

2011in progress0.75 Francs

TheCIA World Fact bookestimates Switzerland's 2011 exports at $308.3 billion and the 2010 exports at $258.5 billion.


Switzerland's largest trading partner is Germany. In 2009, 21% of Switzerland's exports and 29% of its imports came from Germany. The United States was the second largest destination of exports (9.1% of total exports) and the fourth largest source of imports (6.7%).Switzerland's neighbours made up next largest group; Italy was third for exports (8.6%) and second for imports (10%), France was fourth for exports (8%) and third for imports (8.1%) and Austria was fifth for exports (4.6%) and sixth for imports (3.7%). Major non-European trading partners included; Japan (seventh for exports with 3.6% and twelfth for imports with 2%), China (eighth for exports and imports with 3.1% and 2.5% respectively) and Turkey (sixteenth for exports with 1.2% and ninth for imports with 2.3%).As a first world country with a skilled labour force, the majority of Swiss exports are precision or 'high tech' finished products. Switzerland's largest specificSITCcategories of exports include;medicaments,glycosidesand vaccines, watches, orthopaedic appliances and precious jewellery. Some raw ores or metals are exported, but the majority of the exports in this category are finished jewellery or other finished products. Agricultural products that Switzerland is famous for, such as cheese (0.29%), wine (0.05%) and chocolate (0.39%) all make up only a small portion of Swiss exports and agricultural products make up only a small portion of all exports.[20]Switzerland's main imports include;medicaments, cars, precious jewellery and other unclassified transactions. While Switzerland has a long tradition of manufacturing cars,[21]there are currently no large-scale assembly line automobile manufacturers in the country.

European UnionApart from agriculture, there are minimal economic and trade barriers between the European Union and Switzerland. In the wake of the Swiss voters' rejection of theArea Agreement in 1992, the Swiss Government set its sights on negotiating bilateral economic agreements with the EU. Four years of negotiations culminated inBilateral, a cross-platform agreement covering seven sectors: research, public procurement, technical barriers to trade, agriculture, civil aviation, land transport, and the free movement of persons. Parliament officially endorsed the Bilateral in 1999 and it was approved by general referendum in May 2000. The agreements, which were then ratified by the European Parliament and the legislatures of its member states, entered into force on June 1, 2002.

International comparisonCountriesAgriculturalsector%Manufacturingsector%Servicessector%Unemploymentrate%Unemploymentrate (females)%Unemploymentrate (males)%Average hoursworked perweek





Italy 4.229.8666.




Switzerland has kept its title as the world's most competitiveeconomyfor the fifth year running, though it needs to resist any temptation to protect its core banking sector if it wants to stay top, the World Economic Forum said on Wednesday.The Geneva-based body, most famous for gathering politicians and billionaires at an annual shindig in the Alpine resort ofDavos, said the same economies made the top 10 as last year, but in a different order.Singapore and Finland remained in second and third place respectively in the Forum's annual Global Competitiveness Report.Germany, the United States, Hong Kong andJapanall edged up while Sweden, the Netherlands and the United Kingdom all slipped by two or three notches.The United States' flair forinnovationhelped it reverse a four-year downward trend, although serious concerns remained over its macroeconomic stability, the Forum said, ranking it 117 out of 148 countries in that category.Switzerland has been hit hard by a global crackdown on tax havens, succumbing to pressure from the EU and the United States to give up a centuries-old tradition of banking secrecy.While most of the top 40 remained relatively static,South Koreaslid six places to 25th, weakened by its poorly functioning financial market, quality of its institutions and extremely rigid labor market, said the report.Chinaremained in 29th place and again led the BRICS pack, whileIndonesiaclimbed 12 places to 38th, helped by a 17-place jump in infrastructure and other advances.The report defines competitiveness as "the set of institutions, policies, and factors that determine the level of productivity of a country".Despite continued economic woes, European economies are still the most dominant in the world, according to the Global Competitiveness Index 2012-2013 produced by the World Economic Forum.

CHAPTER 3 BOP DATA OF SWITZERLANDCompared to the same quarter one year earlier, Switzerlands current account surplus advanced by CHF 6 billion to CHF 20 billion. The financial account posted net capital outflows of CHF 39 billion, compared with CHF 30 billion in the same quarter one year earlier, and the composition of the net outflows changed considerably. The outflows in Net Bank Lending continued, while as for portfolio investment slight outflows were visible.

Update Q2/2013 The second quarter showed one movement: Investors were piling more into Swiss equities than Swiss into foreign stocks again. The red line below crossed the blue again (see above). The SNB losses in Q2/2013 represent an additional outflow; this time in reserve assets. The losses, however, are only a valuation effect and do not weaken the currency. The main important development, however was that Net Bank Lending has inverted path, strong net outflows of 28 bln. CHF.

The Balance of Payments for Q1/2013 In the first quarter of 2013, the Swiss franc weakened: one major reason behind this was that outflows in the financial account, excluding reserve assets, were able to counter the strong current account surplus. Direct investment outflows intensified, net portfolio investments were slightly negative. Most importantly net lending was slightly negative for the first time since 2003, the Swiss were lending more to foreigners than the opposite. The quickly available proxy for the balance of payments are SNB sight deposits. They are not rising any more; this implies that the SNB is not intervening, and implicitly that the Financial Account (excl. SNB reserves) is able to neutralize the continuously positive current account surplus.

It becomes obvious that the two major enemies of the SNB are the inflows via persisting current account surpluses and positive net bank lending to Switzerland. The latter means that more foreigners (e.g. rich foreign clients of Swiss banks) lend to the Swiss than the Swiss to foreigners. It may also be a means of financing of direct investments of Swiss multi-nationals. Since 2004 this net lending component has been positive, most interestingly even during the period of the weak franc. Portfolio Investments: In 2010 and 2012 more foreigners bought Swiss stocks than Swiss foreign equities bonds play a minor role1. The carry trade, short-term funds in euro or other foreign currencies financed with Swiss francs, do not play a role any more. Direct Investments: Continuing direct investments of Swiss multi-nationals represent outflows. These outflows were helpful for the central bank, but they were far smaller than in 2005 or 2006.The Swiss International Investment Position shows that net lending by foreign clients has increased despite some outflows due to regulation issues (see picture). Net lending to Switzerland is increasing, currently 262 bln. CHF (difference between column 2 and 3). We judge that the net positive lending to Switzerland could remain a major danger for the central bank because it sustains the Swiss real estate boom, implies rising money supply and in the longer term inflation. Between 1999 and 2007, however, the Swiss saw more outflows in the financial account, in both portfolio and direct investments. This helped to offset the strong current account surplus. The high inflows of around 400 billion francs between 2009 and 2012 could be countered only with an increase of reserve assets. This number seems to be far worse than during the collapse of the Bretton Woods system, when the ten times bigger Germany had to buy reserves for 71 billion German Marks (at the time around 56 billion CHF).

As for the behavior of the Swiss franc, we suggest the following insights: As opposed to Japan, Switzerland has a trade surplus in goods and services. Together with migration to Switzerland, this constitutes a strong argument for an appreciating franc, while the yen should rather depreciate (what has effectively happened since October 2012). Labor income (only 25% of total current account surplus) represent an outflow and weakens the currency. The investment income surplus may remain in foreign currency. This is valid especially for direct investments of Swiss multi-nationals. Whether income from portfolio investments is changed into francs and CHF investments depends on short-term rate differentials and on the relative attractiveness of Swiss stocks, i.e. on the net portfolio investments. Net portfolio investments: Attractiveness of Swiss stocks compared to European stocks We have seen above that in 2010 and 2012 foreigners bought far more Swiss equities than Swiss foreign stocks. The Asset Market Model stipulates that the Swiss franc can only weaken if euro zone stocks and peripheral bonds obtain a rising attractiveness among Swiss investors. Those are the ones that finally decide about the allocation of the Swiss current account surplus. Especially Spanish, French and Italian stocks seem to be at cheap valuations. The question, however, is if the currently very weak consumer spending in these countries will continue to harm company profits or not. For many Swiss investors, Swiss real estate and stocks offers lower risk and higher return.

A trade surplus can be seen as a proxy for the combination of company profits in international trade and/or a public sector surplus (see more). The Spanish trade deficit was particularly high in 2007 with a spending rush based on the real-estate bubble, but interest rate differentials (the so-called carry trade) between the euro zone and Switzerland kept the franc weak.

CHAPTER 4 COMPARISON OF LAST FIVE YEARS BOP STATUS OF SWITZERLANDIn 2009,Switzerland's economy benefits from a highly developed service sector, led by financial services, and a manufacturing industry that specializes in high-technology, knowledge-based production. In recent years the Swiss have brought their economic practices largely into conformity with the EU's, in order to enhance their international competitiveness, but some trade protectionism remains, particularly for its small agricultural sector. The global financial crisis and resulting economic downturn put Switzerland in a recession in 2009 as global export demand stalled. The Swiss National Bank during this period effectively implemented a zero-interest rate policy in a bid to boost the economy and prevent appreciation of the franc. Switzerland's economy will probably experience modest GDP growth in 2010, when Bern is scheduled to implement a third fiscal stimulus program, but its prized banking sector has recently faced significant challenges. The country's largest banks suffered sizable losses in 2008-09, leading its largest bank to accept a government rescue deal in late 2008. In 2009 Swiss financial regulators ordered the country's largest bank to reveal at Washington's behest the names of US accountholders suspected of using the bank to commit tax fraud. Bern also has recently signed dual taxation agreements with more than ten countries to improve information exchange. These steps will have a lasting impact on Switzerland's long history of bank secrecy.In the last 3 months of 2009 the GDP grew by 0.6% which showed the first increase of the year. As there was a growth rate of 0.7% and 0.5% from the last 2 quarters of 2009 there was a solid increase in house hold spending, there was better support from the government regarding the economy and there was a higher demand for Swiss goods. Fiscal stimulus is the main contributor to rise in Switzerlands GDP. A cut back on monetary stimulus and focus on fiscal policies to improve conditions in intended in future.

In 2010,Swiss Economy Stabilizing But Recovery in 2010 Remains Sluggish And Unemployment High.Tourism, banking, engineering, and insurance are significant sectors of the economy and heavily influence the country's economic policies. Swiss trading companies have unique marketing expertise in many parts of the world, including Eastern Europe, the Far East, Africa, and the Middle East. Not only does Switzerland have a highly developed tourism infrastructure (making it a good market for tourism-related equipment and services), the Swiss also are intrepid travellers. Per capita, Switzerland is among the countries with the most visitors to the United States every year. In 2010, about 391,000 Swiss citizens came to the United States as tourists. Tourism is the most important U.S. export to Switzerland.Economic Tendencies and Forecasts by Expert Group on Economic Forecasts of the Federal Government. The global economy is currently recovering faster than anticipated from the previous strong economic slump. In Switzerland, too, the recession has slowed down in the second quarter, and for the second half of the year, a positive change is underway. For this reason, the expert group of the Federal Government is expecting a weaker decline of the Swiss gross domestic product (GDP) than in June (-1.7% instead of -2.7%). However, it is assumed that the international economy, after its first strong recovery, will run out of steam again in the course of 2010 which will also limit further economic recovery in Switzerland. For 2010, the expert group expects a weak GDP growth (+0.4% instead of -0.4%) and rising unemployment.

In 2011,The Swiss economy increased by 2.7% in 2010; its growth was expected to slow to 1.7% for 2011 as a result of various factors such as an appreciating Swiss franc. However, due to successful government debt reduction (imposed by the so-called debt brake), Switzerland is not expected to be impacted by strict austerity measures imposed in other areas of Europe. Switzerland led the rankings of the World Economic Forums Global Competitiveness Report 2011-2012, reflecting the country's sound institutional environment, excellent infrastructure, efficient markets, competent macroeconomic management, world-class educational attainment, and high levels of technological innovation, which boost Switzerland's competitiveness in the global economy. The country has a well-developed infrastructure for scientific research. Companies spend generously on research and development (R&D), and intellectual property protection is strong. Business activity benefits from a well-developed institutional framework, characterized by the rule of law, an efficient judicial system, and high levels of transparency and accountability within public institutions. Higher education and training are rapidly growing in importance as engines of productivity growth.The Swiss economy earns roughly half of its corporate earnings from the export industry. The EU is Switzerland's largest trading partner (59% of exports and 75% of imports in 2010), and economic and trade barriers between them are minimal. After more than 4 years of negotiations, an agreement known as the "Bilaterals I" covering seven sectors (research, public procurement, technical barriers to trade, agriculture, civil aviation, land transport, and the free movement of persons) entered into force on June 1, 2002. Switzerland has so far attempted to mitigate possible adverse effects of non-membership by conforming many of its regulations, standards, and practices to EU directives and norms. Full access to the Swiss market for the original 15 EU member states entered into force in June 2004, ending as a result the "national preference." The Swiss agreed to extend these preferences to the 10 new EU members on September 25, 2005, with restrictions remaining until 2011.

In 2012,Swiss GDP grew by 0.2% q-o-q in Q4 2012 (+1.0% annualised), above consensus expectations (+0.0%), but significantly below the growth rate recorded in Q3 (+0.6%). Actually, quarterly growth was quite volatile last year, with strong numbers in Q1 and Q3, and weaker figures in Q2 and Q4. Nevertheless, looking beyond short-term volatility, the overall picture is that Swiss GDP growth remained surprisingly resilient last year: +1.4% y-o-y in Q4 2012. In the context of a recession in the euro area, this performance can be considered as quite healthy. The Swiss economy is clearly keeping the lead compared to most other European countries. Euro-area real GDP was down -0.9% y-o-y in Q4 2012.Switzerland is an OECD country, a wealthy, medium-sized economy located in Western Europe. Switzerland has a population of8.29million people.In2012Switzerland's GDP was USD631billion. Switzerland's GDP grew at1.00%in2012. GDP per capita, in purchasing power-adjusted dollar terms, is USD44,864.Inflation in Switzerland, as measured by the change in consumer price index, was-0.67%in2012, versus0.23%in2011. Unemployment in Switzerland in2012was2.90%, versus2.80%in2011.Switzerland's economy is predominantly services-based. Agriculture accounts for1.12%of GDP and employs3.40%of the population. Manufacturing and industry accounts for26.03%of GDP and employs20.30%of the population. Services accounts for44.60%of the GDP and employs35.70%of the population.Switzerland's total exports inn.a.were USDn.a.billion while its total imports were USDn.a.billion.Switzerland's government revenues are33.85%of GDP while its government spending is33.44%of GDP. Thus Switzerland's government runs a surplus of0.85%of GDP. Net government debt is25.91%of GDP.Switzerland's currency is the Swiss Franc (CHF). The latest exchange rate, as of20-Jan-2014, is0.91CHF per 1 USD.

In 2013,Switzerland recorded a current account surplus of Sfr66 billion ($70 billion) in 2013, a Sfr14 billion increase on the year before, driven chiefly by overseas investment income, which nearly doubled to Sfr40 billion, according to the country's balance of payment figures released by the Swiss National Bank (SNB) today.The Swiss financial account, meanwhile, saw a net capital outflow of Sfr97 billion nearly a tripling of the previous year's figure following the SNB's large purchases of foreign assets in an attempt to keep the Swiss franc from appreciating to unsustainable levels as investors sought a 'safe haven' from the turmoil in the eurozone last year.Reserve assets at the SNB, mainly consisting of gold and foreign currency investments, increased by Sfr175 billion on a transaction basis nearly a fourfold increase from 2011 reflecting the central bank's commitment to keeping the franc from appreciating to levels that would threaten the livelihood of Swiss exporters. By contrast, net capital inflows of Sfr94 billion were registered in banks' lending and deposit business (Sfr58 billion), Swiss National Bank lending (Sfr23 billion) and portfolio investment (Sfr13 billion).The higher receipts from Swiss direct investment abroad are largely made up of returns on holdings that the SNB accumulated when intervening in the open market in an effort to put downward pressure on the exchange rate during the past few years.In foreign trade of goods and services, a receipts surplus of Sfr57 billion was recorded, compared with Sfr59 billion one year earlier. The decline was due to the fact that the 2% growth in receipts from exports of goods and services was lower than the increase in the cost of imports, the SNB said.Direct investment by the services sector declined, while manufacturing investment increased slightly. The European Union, Asia and central and south America each received one-third of direct investment, according to the central bank.Foreign direct investment in Switzerland fell dramatically from Sfr21 billion to just Sfr1 billion due to "disinvestment in finance and holding companies", despite the manufacturing industry "becoming a recipient of direct investment again", following disinvestment in 2013The annual balance of payments report will not be published next year due to the introduction of new statistical standards, the SNB said.Despite continued economic woes, European economies are still the most dominant in the world, according to the Global Competitiveness Index 2012-2013 produced by the World Economic Forum.The list is based upon 12 pillars, including institutions, infrastructure, microeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication and innovation, which all help to weight a score out of seven.While we report the results of the 12 pillars of competitiveness separately, it is important to keep in mind that they are not independent," explained the report. They tend to reinforce each other, and a weakness in one area often has a negative impact in others. For example, a strong innovation capacity (pillar12) will be very difficult to achieve without a healthy, well-educated and trained workforce (pillars4 and 5) that is adept at absorbing new technologies (pillar9), and without sufficient financing (pillar8) for R&D or an efficient goods market that makes it possible to take new innovations to market (pillar6). Although the pillars are aggregated into a single index, measures are reported for the 12 pillars separately because such details provide a sense of the specific areas in which a particular country needs to improve.

CHAPTER 5 - CONCLUSIONIn the past Switzerland typically had a foreign trade deficit. More recently, however, this imbalance was more than compensated for by income from services, investments, insurance, and tourism. Restructuring of enterprises in the 1990s, due to the strength of the Swiss franc, caused the export-oriented manufacturing sector to become highly successful. Exports of goods and services amounted to some 46% of GDP in 2000.The US Central Intelligence Agency (CIA) reports that in 2002 the purchasing power parity of Switzerland's exports was $100.3 billion while imports totalled $94.4 billion resulting in a trade surplus of $5.9 billion.The International Monetary Fund (IMF) reports that in 2001 Switzerland had exports of goods totalling $95.8 billion and imports totalling $94.3 billion. The services credit totalled $27.7 billion and debit $15.3 billion. The following table summarizes Switzerland's balance of payments as reported by the IMF for 2001 in millions of US dollars.Switzerland has kept its title as the world's most competitive economy for the fifth year running, though it needs to resist any temptation to protect its core banking sector if it wants to stay top, the World Economic Forum said on Wednesday.Switzerland has been hit hard by a global crackdown on tax havens, succumbing to pressure from the EU and the United States to give up a centuries-old tradition of banking secrecy. It also made a big improvement in labour market efficiency, but was let down by bribery, security and a worsening health picture. There was also little change at the bottom of the list. The overall wooden spoon went to Chad, just behind Guinea and last year's loser Burundi. The report defines competitiveness as "the set of institutions, policies, and factors that determine the level of productivity of a country".

GrowthIndicatorLevelUnitAs Of1Y Chg~5Y Ago~10Y Ago~25Y Ago

GDP631Billion USD2012n.a.524335198

Real GDP Growth1.00%% Chg YOY2012-0.80%2.20%0.00%3.30%

GDP Per Capita78,881USD2012-4.77%69,04945,74630,137

GDP Per Capita at PPP44,864USD at PPP20122.20%43,02833,84122,040

GDP as Share of World GDP at PPP0.43%% of World2012-0.01%0.46%0.50%0.70%

Real GDP543Billion USD20111.93%516455361

Balance of PaymentsIndicatorLevelUnitsAs Of1Y Chg~5Y Ago~10Y Ago~25Y Ago

Trade Balance65.86Billion USD2012-3.49%58.1721.562.12

Current Account Balance69.54Billion USD2011-11.49%38.8424.557.29

External Debtn.a.Billion USDn.a.n.a.n.a.n.a.n.a.

Trade Balance as Share of GDP10.43%% of GDP20120.05%11.09%6.44%1.07%

Current Account Balance as Share of GDP10.52%% of GDP2011-3.74%8.62%8.56%3.99%

External Debt as Share of GDPn.a.% of GDPn.a.n.a.n.a.n.a.n.a.

In the 1950s, annual GDP growth averaged 5% and Switzerland's energy consumption doubled. Coal lost its rank as Switzerland's primary energy source, as other fossil fuels such as crude and refined oil and natural and refined gas imports increased. This decade also marked the transition from an industrial economy to a service economy. Since then the service sector has been growing faster than the agrarian and industrial sectors.In the 1970s GDP growth rates gradually declined from a peak of 6.5% in 1970 until contracting 7.5% in 1975 and 1976. Switzerland became increasingly dependent on oil imported from its main supplier, the OPEC cartel. The 1973 international oil crisis caused Switzerland's energy consumption to decrease from 1973 to 1977. In 1974 there were three nationwide car-free Sundays when private transport was prohibited as a result of the oil supply shock. From 1977 onwards GDP grew, however Switzerland was also affected by the1979 energy crisiswhich resulted in a short term decrease of Switzerland's energy consumptionIn the 1990s, Switzerland's economy was marred by slow growth, having the weakest economic growth inWestern Europe. The economy was affected by a 3-year-recession from 1991 to 1993 when the economy contracted by 2%, which also became apparent in Switzerland's energy consumption and export growth rates. Switzerland's economy averaged no appreciable increase (only 0.6% annually) ingross domestic product(GDP).The stock market collapse has deeply affected investment income earned abroad. This has translated to a substantial fall in the surplus of thecurrent account balance. In 2006, Switzerland recorded a 15.1% per GDP surplus.