Project

Macro Economics

Code: MGT-472

Group Members

Abdulahad Bhatti(GL)

Summam Shahid

Obaid Mehmood

Fasih-ud-din

Submitted to: Mr. Abdul Majid

Country Name

Switzerland

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Table of Contents
1. Chapter 1: Introduction ................................................................................................................5
1.1. History: .......................................................................................................................................... 5
1.2. Geography ..................................................................................................................................... 5
1.2.1. Location ................................................................................................................................. 5
1.2.3. Area ........................................................................................................................................ 6
1.3. Culture ........................................................................................................................................... 6
1.3.1. Languages .............................................................................................................................. 6
1.3.2. Religion .................................................................................................................................. 6
2. Chapter 2: Overview of the Economy ........................................................................................ 10
2.1. Agriculture and Forestry ........................................................................................................... 10
2.2. Resources and Power.................................................................................................................. 10
2.3. Manufacturing ............................................................................................................................ 10
2.4. Trade ............................................................................................................................................ 11
2.5. Finance......................................................................................................................................... 11
2.6. Services ........................................................................................................................................ 12
2.7. Labor and taxation ..................................................................................................................... 12
2.8. Transportation and telecommunications....................................................................................... 12
3. Chapter 3: Variables of Economy ................................................................................................ 13
3.1. History of Economy .................................................................................................................... 13
3.2. GDP .............................................................................................................................................. 14
3.3. GNP .............................................................................................................................................. 18
3.4. Revenues ...................................................................................................................................... 18
3.5. Expenses ...................................................................................................................................... 19
3.5.1. Cost of accommodation in Switzerland ............................................................................ 19
3.5.2. Paying for refuse collection ................................................................................................ 19
3.6. Inflation ....................................................................................................................................... 20
3.7. Unemployment ............................................................................................................................ 20
4. Chapter 4: Polices and Taxes ...................................................................................................... 22
4.1. Monetary policies........................................................................................................................ 22
4.2. Fiscal policy ................................................................................................................................. 23
4.2.1. Breaking down Fiscal policy .............................................................................................. 23

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 4.3. Funds Distribution...................................................................................................................... 23
4.3.1. Addressed qualified investors ............................................................................................ 24
4.3.2. Addressed unqualified investors ....................................................................................... 24
4.4. Progressive, Regressive .............................................................................................................. 24
4.4.1. Progressive .......................................................................................................................... 24
4.4.2. Regressive ............................................................................................................................ 26
4.5. Proportional Taxes ..................................................................................................................... 27
5. Chapter 5: Trade ........................................................................................................................ 28
5.1. Imports ........................................................................................................................................ 28
5.1.1. Top 10 imports of Switzerland .......................................................................................... 28
5.2. Exports......................................................................................................................................... 28
5.2.1. Top 10 Exports .................................................................................................................... 29
5.3. Trade Sector ................................................................................................................................ 29
6. Chapter 6: Conclusion ................................................................................................................ 31
Refrences: ......................................................................................................................................... 32

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1. Chapter 1: Introduction
Switzerland is a noncoastal country in Central Europe. Switzerland is one of the richest countries
in the world. It has established economy. The country is well known for its high pioneering ability.
In 2015 Switzerland was ranked first in the world in Global Pioneering Index. Switzerland is well-
known for its chocolate, cheese, and alpine mountains. Switzerland is indeed a major economic
power, thanks to its long tradition of financial services and high-quality, expert manufactures of
items such as precision timepieces, optics, chemicals, and pharmaceuticals.

1.1. History:
 1815 :
In the wake of the Napoleonic wars, Switzerland's borders and neutrality are established at the
Congress of Vienna.
 1923:
Switzerland and Liechtenstein form a customs union, which establishes a common economic
and currency area.
 1959:
Switzerland becomes a founding member of the European Free Trade Association (EFTA).
 1992:
Switzerland joins the World Bank and International Monetary Fund (IMF), but rejects
membership of the European Economic Area.
 2002:
Switzerland officially becomes a member of the United Nations.
 2005:
A referendum vote approves opening the Swiss job market to workers from the 10
newest European Union countries.
 2011:
The government announces that the Swiss franc will be pegged to the euro, after Swiss
manufacturers warn that the currency's strength is making exports uncompetitive.
 2012:
The government re-imposes immigration quotas on workers from central and eastern Union
countries.
 2015:
Steep depreciation g tourism and export sectors’ of the euro prompts the Swiss National Bank
to abruptly terminate the pegging of the franc to the euro. This move causes the franc to soar,
prompting warnings of severe damage to Switzerland's struggling.[1]

1.2. Geography

1.2.1.Location
Neighboring countries include Austria, France, Italy, Liechtenstein, and Germany. The geography
of Switzerland is mostly mountains (Alps in south, Jura in northwest) with a central plateau of

5
rolling hills, plains, and large lakes. The government system is formally a confederation but similar
in structure to a federal republic; the chief of state and head of government is the president.
1.2.2. Borders
Switzerland is bordered to the west by France, to the north by Germany, to the east
by Austria and Liechtenstein, and to the south by Italy. [2]
1.2.3. Area
It extends about 135 miles (220 km) from north to south and 220 miles (350 km) at its widest extent
from west to east.[2]

1.2.4. Population
The population of Switzerland in 2017 is 8,464,000.\

1.3. Culture
1.3.1. Languages
People are naturally fascinated by Switzerland — and this admiration isn’t just a love for chocolate
and mountain walking (all right, maybe a little bit). Many people are fascinated because it’s a land
comprised of multiple linguistic groups that has largely avoided the social conflict that has plagued
other multilingual societies throughout history. In fact, the Swiss have turned their multilingual
identity into one of their greatest natural resources.
Switzerland recognizes four languages as so-called “national languages,” French, German, Italian
and Romansh while speakers of these languages can be found throughout the country, the four
languages are largely confined to specific regions [2].
1.3.2. Religion
 Switzerland is a Christian country. Around two-thirds of the population are either Roman
Catholic or Protestant (Reformed-Evangelical)
 Freedom of religion is a basic constitutional right in Switzerland.
 38.2% of the Swiss population are Roman Catholic.

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  26.9% of the Swiss population belong to the mainstream Protestant church.
 4.9% of the Swiss population are Muslim, most of whom originate from the Balkans and
Turkey.
 0.3% of the Swiss population are Jewish. There are Jewish communities in over two dozen
Swiss towns. The cities of Geneva and Zurich are home to Switzerland’s largest Jewish
communities.
 21.4% of the population have no religious affiliation, compared to only 1.2% in 1970.
 Many of Switzerland's festivals, customs and local traditions have their roots in religion [2].

1.4. Government
1.4.1. Form of government
Federal state with two legislative houses (Council of States; National Council)
Switzerland is the closest state in the world to have a direct democracy where citizens may challenge
any law voted by the federal assembly. Switzerland’s Executive, Judicial and Legislative
institutions are organized on federal, cantonal and communal levels. Switzerland, unlike many of
other European states, does not have a President or a Prime Minister, and the country’s citizens are
at the pinnacle of power.
1.4.1.1. Federal Assembly of Switzerland
The Federal Assembly or the legislature is comprised of the National Council and the Council of
States. The Council of States consists of 46 members who represent the cantons. After every four
years, citizens of Switzerland vote for 200 members to constitute the National Council. The two
chambers of parliament undertake legislative duties, and their sessions in parliament are open for
citizens to attend. Any citizen can challenge any law or amendments proposed by the Federal
Assembly.
1.4.1.2. Federal council of Switzerland
a. Six members constitute the Executive branch that is the Federal Council of Switzerland. They
engage in what can be termed as the collective presidency and are elected by parliament. Each
of these members leads a federal department (ministry). The country’s seven departments are
Finances, Economy and Education, Internal Affairs, Defense and Sports, Energy, Traffic and
Environment, and Justice.
b. The members of the Federal Council are from the four top parties in the country, and this
greatly helps in forming a stable government. There is no limit to the term of office as a
member of the Federal Council.
c. The President of the Swiss Confederation, a largely ceremonial role, rotates among the
members every year. The representative President represents the country in international
conferences, sets the agenda to be discussed during the weekly conferences and addresses the
citizens on national holidays.
1.4.1.3. Judiciary of Switzerland
Heading the judiciary is the Federal Supreme Court. Judges to the Court are elected by the Federal
Assembly after every six years. The Supreme Court is the top court of appeal after the cantonal

7
courts. The Supreme Court also receives appeals on administrative rulings of the federal
administration.
1.4.1.4. Cantonal Administrations
Cantons in the Swish Federations organize themselves in respect to laws and policies, the federal
constitution and minorities. Every canton has its constitution and elects an average of 5 members
to make up the cantonal government. Most of the cantons also have one parliament. The federal
government's delegates many of its duties to the cantonal administrations. 6 of the 26 cantons in the
country are regarded as half-cantons, but all cantons have equal rights of autonomy and
competencies. Cantons have armed police forces and run universities and hospitals and collect
income taxes.
1.4.1.5.Elections and Referenda
The Swiss electorate can vote at least four times on matters of national proposals every year. The
Swiss electorate has more say in national and cantonal affairs than anywhere else in the world. The
Swiss electorates elect members of the cantonal governments and the Federal Assembly.\

1.4.1.6. Political Parties in Switzerland

Five major parties are represented in the country’s Federal Council. These parties are Free
Democratic Party, Christian Democratic Party, Social Democratic Party, Conservative Democratic
Party of Switzerland, and Swiss People’s Party.

1.4.2. Capital of Switzerland

The capital of Switzerland is Bern.

Bern, the capital city of Switzerland, is built around a crook in the Aare River. It traces its origins
back to the 12th century, with medieval architecture preserved in the Altstadt (Old Town). The
Swiss Parliament and diplomats meet in the Neo-Renaissance Bundeshaus (Federal Palace). The
Französische Kirche (French Church) and the nearby medieval tower known as the Zytglogge both
date to the 13th century.[3]
Elevation: 540 m
Area: 51.6 km²
Weather: -1°C, Wind N at 10 km/h, 89% Humidity
Local time: Monday 7:01 pm
Population: 133,115 (2017) United Nations

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1.4.3. President
Home Affairs Minister Alain Berset has been elected by parliament to be Switzerland’s president
for 2018. The rotating office is held by a different member of the seven-member Federal Council
every calendar year.

Vice president is moving into the role from his current position of vice president and will take on
the full presidency for the first time since becoming a Federal Council minister five years ago.
The Social Democrat will take over duties from Doris Leuthard on January 1, 2018 after receiving
190 out of 210 votes cast in parliament.
On Wednesday, parliament also voted finance minister Ueli Maurer as Swiss vice president for
2018 with 178 votes.
The choice of presidency is based on seniority in the government, which means that a minister
becomes president at least once every seven years for a one-year term.
Berset will juggle his new duties as president with his responsibilities as home affairs minister
next year. His biggest challenge remains steering through an overhaul of Switzerland’s over-
burdened pension system after voters rejected reform proposals in September.[4]

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2. Chapter 2: Overview of the Economy
The state of a country or region in terms of the production and consumption of goods and services
and the supply of money is known as Economy.

There are three types of Economy

1) Traditional Economy
2) Command Economy
3) Market Economy

Switzerland has a modern market economy in which the prices of goods and services are
determined in a free price system. Switzerland is a member of European Free Trade Association.

2.1. Agriculture and Forestry

About one-third of Switzerland’s land is devoted to agricultural production (grains, fodder,
vegetables, fruits, and vineyards) and pasture. Some of the pastureland is used exclusively for
mountain pasture, including the Monte Rosa region. The variation in soil quality within small areas
in Switzerland, produced by geologic conditions and by the relief, makes large-scale single-crop
farming difficult; instead, a particularly varied assortment of crops are grown in a limited space.
About two-thirds of all farms combine grass and grain cultivation, and the latter satisfies nearly
four-fifths of domestic demand.[5]

2.2. Resources and Power

Although Switzerland has few natural resources (salt is the only mined resource) and
lacks indigenous hydrocarbons to power its industries, high precipitation in the Alps, glaciated U-
shaped valleys, the storage of glacial melt waters behind giant dams, and the great range of
elevations provide an ideal environment for the generation of hydroelectric power. The electrical
industry has become an essential branch of the country’s economy, with nearly 45 reservoirs and a
few hundred large hydroelectric power plants in operation. Numerous low-pressure plants are
situated on the lower courses of the rivers in the Mittelland. Major electro technical progress has
occurred in the Alps, where large systems of tunnels and subterranean powerhouses have been
constructed in suitable valleys.[5]

2.3. Manufacturing
Switzerland’s transformation into an industrial state began during the second half of the 19th
century. The survival of Swiss industry is based on a formula that has worked very well: build
specialized products such as motors, turbines, and watches; guarantee the delivery date; offer the
necessary financing through an efficient banking network; provide effective after-sales service; sell
the product all over the world and thus achieve economies of scale; and, where necessary, build
local factories. The chemical-pharmaceutical industry, including the firms of Novartis, Ciba
Specialty Chemicals, Clariant, and Roche Holdings (all with headquarters in Basel), is a good
example of Swiss competitiveness. Like many Swiss industries, the chemical-pharmaceutical

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industry spends large sums of money on research and development. A number of
firms collaborate with the country’s universities and with the Federal Institutes of Technology in
Zürich and Lausanne.[5]

2.4. Trade
Switzerland’s major exports are machinery and equipment, chemical-pharmaceutical products,
watches, and textiles and apparel. Raw materials, food, vegetable oils, and fuel account for about
one-quarter of total imports and are transported by rail, truck, and barge. Among other leading
imports are manufactured goods, motor vehicles, and chemical products.[5]

2.5. Finance
Switzerland’s official monetary unit is the Swiss franc, which is also used in Liechtenstein. A
central location, political stability, and privacy laws—the Swiss Banking Law (1934) made it a
criminal offense to divulge information about clients and their accounts without consent—have
been key factors in making Switzerland one of the world’s most important financial centers.
However, secrecy laws also encouraged organized-crime syndicates to establish accounts in Swiss
banks, and this has prompted modification of Swiss banking laws to prevent abuse.[5]

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2.6. Services

Tourism is a significant source of revenue for Switzerland, with receipts slightly outpacing
expenditures by Swiss tourists abroad. Primary destinations for Swiss tourists include
France, Spain, Italy, and Germany. Among the principal foreign visitors to Switzerland are
Germans, who account for more than one-fourth, followed by Americans, Britons, and Japanese. A
significant proportion of tourism receipts also come from residents of Switzerland.[5]

2.7. Labor and taxation

a. Services, including retail, trade, banking, and insurance, employ some two-thirds of Swiss
workers. In contrast, manufacturing employs less than one-fifth of the workforce, and only
about 5 percent of workers are employed in agriculture. Switzerland’s unemployment rate is
very low in comparison with most other countries, regularly standing at less than 5 percent.
Switzerland has among the highest rates of female participation in the workforce in Europe.
b. Employer-employee relations have generally been good. The Swiss Federation of Trade
Unions (Schweizerischer Gewerkschaftbund), founded in 1880 and linked with the Social
Democratic Party, is a coalition of more than a dozen individual trade unions representing
nearly 400,000 workers. Other major unions include the Swiss White-Collar Federation
(Vereinigung Schweizerischer Angestelltenverbände) and the Confederation of Christian
Trade Unions (Christlichnationaler Gewerkschaftsbund). With about one-fifth of workers
belonging to a trade union, Switzerland has among the lowest unionization rates in Europe.
Since the Great Depression of the early 1930s, the unions have generally denounced the use
of strikes as economic and political weapons, and disputes are usually settled by
arbitration.[6]

2.8. Transportation and telecommunications

Control of the most important Alpine passes and the ancient route through the Mittelland between
the Rhône, Rhine, and Danube waterways has given Switzerland a key position in European transit
traffic. Indeed, the main artery of European trans-Alpine traffic, the Saint Gotthard Pass, runs
through Swiss territory.
The large-scale technical mission of modern highway construction was preceded by the building of
the railway system, which has thousands of miles of track and includes hundreds of tunnels, among
them the 12.5-mile (20-km) Simplon Tunnel and the famous winding tunnels of the Saint Gotthard
railway, by means of which elevation differences between valley levels are overcome. Nearly all
of the track in the Swiss railway system has been electrified. [6]

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3. Chapter 3: Variables of Economy

3.1. History of Economy

Throughout the world wide the economy of the Switzerland lies on 3rd position.

For the time being, this analysis concludes that while the Swiss economy as a whole improved early
and was already among the most successful around 1900.
The development of GDP per capita from 1914 to 2003 is captured. Switzerland surpassed the
United Kingdom in the 1920s and the United States in the 1950s becoming number one thereafter.
However, the United States caught up in the second half of the 1980s and became again the richest
country, as measured by Maddison’s (2003) GDP per capita. Note that relative to the average GDP
per capita of the countries. Switzerland increased its total real income or output in the period from
the Second World War up to the mid-1970s, but then lost ground during the last 25 years of the
twentieth century. We have emphasized that in many ways Switzerland was not predestined to
become a success story. Without the benefit of hindsight, about 100 years ago any observer, who
had to make a forecast of which country was bound to become richer and was given a choice
between Uruguay or Argentina and Switzerland, would probably have gone for the former two as

13
a matter of course.8 Without any natural resources and always at the fringes of large empires,
Switzerland had little going for it. And yet, its rise from a poor country to one of the wealthiest
nations of the world took place in a relatively short time.[7]

3.2. GDP

The Swiss economy unexpectedly shrank 0.2 percent on quarter in the three months to September
2018, after a 0.7 percent growth in the previous period and missing market expectations of a 0.4
percent expansion. It was the first quarterly contraction since the fourth quarter of 2016, as net trade
contributed negatively to the GDP and investment in equipment slumped while household
consumption was almost unchanged. GDP Growth Rate in Switzerland averaged 0.44 percent from
1980 until 2018, reaching an all-time high of 2.40 percent in the fourth quarter of 1999 and a record
low of -1.90 percent in the fourth quarter of 2008.

On the expenditure side, household consumption is the main component of Swiss GDP and accounts
for 54 percent of its total, followed by gross fixed capital formation (24 percent) and government
expenditure (11 percent). Foreign trade adds 11 percent to GDP as exports account for 64 percent
and imports for 53 percent. This page provides - Switzerland GDP Growth Rate - actual values,
historical data, forecast, chart, statistics, economic calendar and news. Switzerland GDP Growth
Rate - actual data, historical chart and calendar of releases - was last updated on January of 2019
[8].

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Date Annual GDP GDP Growth (%)

2017 680,000M.$ 1.1%

2016 668,748M.$ 1.4%

2015 679,721M.$ 1.2%

2014 709,506M.$ 2.4%

2013 688,751M.$ 1.9%

2012 667,895M.$ 1.0%

2011 699,669M.$ 1.7%

2010 583,047M.$ 3.0%

2009 541,620M.$ -2.2%

2008 553,847M.$ 2.2%

2007 480,280M.$ 4.1%

2006 431,141M.$ 4.0%

2005 408,680M.$ 3.1%

2004 393,577M.$ 2.8%

2003 353,157M.$ 0%

2002 301,525M.$ 0.2%

2001 278,677M.$ 1.3%

2000 272,192M.$ 3.9%

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Date Annual GDP GDP Growth (%)

1999 289,532M.$ 1.7%

1998 294,824M.$ 3.0%

1997 286,567M.$ 2.3%

1996 330,254M.$ 0.5%

1995 342,769M.$ 0.5%

1994 292,675M.$ 1.3%

1993 264,178M.$ -0.1%

1992 271,577M.$ 0%

1991 261,197M.$ -0.9%

1990 258,017M.$ 3.7%

1989 202,212M.$ 4.3%

1988 209,365M.$ 3.3%

1987 193,384M.$ 1.6%

1986 154,449M.$ 1.9%

1985 107,779M.$ 3.7%

1984 106,269M.$ 3.0%

1983 111,278M.$ 0.6%

1982 111,579M.$ -1.3%

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Date Annual GDP GDP Growth (%)

1981 108,905M.$ 1.6%

1980 118,954M.$ 4.6%

1979 105,565M.$ 2.5%

1978 93,913M.$ 0.4%

1977 67,153M.$ 2.4%

1976 62,875M.$ -1.4%

1975 60,111M.$ -7.3%

1974 52,432M.$ 1.5%

1973 45,497M.$ 3.0%

1972 33,830M.$ 3.2%

1971 27,583M.$ 4.1%

1970 22,953M.$ 6.4%

1969 21,000M.$ 5.6%

1968 19,000M.$ 3.6%

1967 18,000M.$ 3.1%

1966 16,000M.$ 2.5%

1965 15,000M.$ 3.2%

1964 14,000M.$ 5.3%

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 Date Annual GDP GDP Growth (%)

1963 13,000M.$ 4.9%

1962 12,000M.$ 4.8%

1961 11,000M.$ 8.1%

1960 9,500M.$

3.3. GNP

Switzerland’s Gross National Product was reported at 181.169 USD bn in Jun 2018. This records an increase
from the previous number of 176.587 USD bn for Mar 2018. Switzerland’s Gross National Product data is
updated quarterly, averaging 100.966 USD bn from Mar 1990 to Jun 2018, with 113 observations. The data
reached an all-time high of 189.946 USD bn in Sep 2011 and a record low of 59.273 USD bn in Mar 1990.
Switzerland’s Gross National Product data remains active status in CEIC and is reported by CEIC Data. The
data is categorized under World Trend Plus’s Global Economic Monitor – Table: Gross National Product:
USD: Europe and Central Asia. CEIC converts quarterly Gross National Product into USD. The State
Secretariat for Economic Affairs provides Gross National Product in local currency. Federal
Reserve Board average market exchange rate is used for currency conversions.[9]

3.4. Revenues

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Switzerland’s Tourism Revenue reached 47 USD bil in DEC 2016, compared with 48 USD bil in
previous year. Switzerland’s Tourism Revenue data is updated yearly, available from Dec 2001 and
a record low of 17,876 USD mn in Dec 2001. CEIC converts annual Tourism Revenue into USD.
Swiss Federal Statistical Office provides data for Tourism Revenue in local currency. Federal
Reserve Board average market exchange rate is used for currency conversions [10].

3.5. Expenses
a. Switzerland is almost as famous for its high cost of living as it is for its ski slopes. Three
Swiss cities featured in the 2017 Mercer Cost of Living Survey's top ten – Geneva, Zurich
and Bern – and rural areas aren't necessarily that much cheaper.
b. On the other hand, Swiss salaries and living standards are also among the highest in the
world. Thanks to efficient public services and well-maintained infrastructure, most expats
feel like the high costs are worth it.
Expats moving to Switzerland should still try to anticipate what their living expenses will be and
negotiate their contracts accordingly. It's also important to keep in mind that taxes differ in every
canton and costs can differ even between villages.

3.5.1. Cost of accommodation in Switzerland

Most people in Switzerland rent property, and a shortage of apartments has developed as a result.
The situation in Zurich and Geneva is especially stark, and stiff competition has resulted in sky-
rocketing rental prices – expats should expect accommodation to take up at least 20 percent of their
salary. In many cases, they'd also need to pay a three-month deposit up front.

3.5.2. Paying for refuse collection

In Switzerland, special garbage bags that are priced according to their size are required for trash
collection, so households that produce more waste will pay more. Recycling is free, and even expats
who aren't especially environmentally conscious can count on a greener life in Switzerland. Exact
costs and conditions differ between municipalities.

19
3.6. Inflation
Switzerland's annual inflation rate eased to 0.7 percent in December 2018 from 0.9 percent in the
previous month, missing market expectations of 0.8 percent. It was the lowest rate since February,
as prices of housing and transportation rose at a slower pace while healthcare costs continued to
fall. The average annual inflation rose to 0.9 percent in 2018 from 0.5 percent in 2017 due in
particular to higher prices for petroleum products and increased housing rentals. Inflation Rate in
Switzerland averaged 2.40 percent from 1956 until 2018, reaching an all-time high of 11.92 percent
in December of 1973 and a record low of -1.40 percent in August of 2015 [11].

3.7. Unemployment
The Swiss unemployment rate rose to a non-seasonally adjusted 2.7 percent in December 2018 from
2.5 percent in the previous month. It was the highest jobless rate since April as the number of
unemployed rose markedly. When adjusted for seasonal factors, the unemployment rate stood at
2.4 percent, unchanged from the previous month. Unemployment Rate in Switzerland averaged
3.26 percent from 1995 until 2018, reaching an all-time high of 5.70 percent in January of 1997 and
a record low of 1.50 percent in May of 2001.
The Swiss unemployment rate rose to a non-seasonally adjusted 2.7 percent in December 2018 from
2.5 percent in the previous month. It was the highest jobless rate since April as the number of
unemployed rose markedly.
The number of unemployed people rose by 9,187 from the previous month, or 8.3 percent, to
119,661 in December. Compared to the same month a year earlier, unemployment fell by 26,993,
or 18.4 percent.
Also, the number of jobseekers went up by 7,738, or 4.1 percent, to 197,950; but dropped by 14,068
year-on-year, or 6.6 percent.
Youth unemployment rate, measuring job-seekers between 15 and 24 years old, was unchanged at
2.4 percent in December, with the number of young unemployed rising by 152, or 1.2 percent, to
13,172. Compared to December 2017, it decreased by 3,508 people, or 21.0 percent.

20
When adjusted for seasonal factors, the unemployment rate stood at 2.4 percent in December,
unchanged from the previous month [12].

21
4. Chapter 4: Polices and Taxes

4.1. Monetary policies

Monetary policy is the macroeconomic policy laid down by the central bank. It involves
management of money supply and interest rate and is the demand side economic policy used by the
government of a country to achieve macroeconomic objectives like inflation, consumption, growth
and liquidity.
The Swiss National Bank (SNB) is the central bank of Switzerland, and is therefore responsible for
the monetary policy of the nation of Switzerland and also for the issuing of Swiss franc banknotes.
The bank is otherwise known as: German: Schweizerische Nationalbank; French: Banque nationale
suisse; Italian: Banca nazionale svizzera; Romansh: Banca naziunala svizra, which are the four
official languages of the country.
The SNB is an aktiengesellschaft under special regulations, and has two head offices, one is in Bern
and the other one in Zurich.
The bank formed as a result of the need for a reduction in the number of banks of issue, which
numbered 53 sometime after 1826. In the 1874 revision of the Federal Constitution it was given the
task to oversee laws concerning the issuing of banknotes. Then in 1891 the Federal Constitution
was revised again to entrust the Confederation with sole rights to issue banknotes. The National
Bank Law was enforced on 16 January 1906, and the National bank began business activities on 20
June 1907, and is thought then founded sometime during either 1906 or 1907. SNB itself states that
it was founded in 1907.
Sometime during World War I (1914-1917[4]), the bank was instructed to release notes of a small
denomination, for the first time, by the Federal Council of Switzerland.[1]
The Bundesrat devalued the Swiss Franc during 1936, and as a result, there was made available to
the National bank, an amount of monies, which the bank subsequently stored in a
Währungsausgleichsfonds reserve for the future, for usage in situations of emergency.
In 1981 the bank participated in research involving Orell Füssli and an optical research group
named Landis and Gyr, of matters of banknote design.
During 1994 the Bank was described as a joint-stock company acting under the administration and
supervision of the Confederation. It had eight branches and twenty sub-branches within cantons.
The governing board had overall executive management of the National bank, with supervision
entrusted to its shareholders, the banks' council, the banks' committee, its local committees and
auditing committee. There were three members of the governing board, who together decided the
monetary policy of the National bank. Towards the end of 1993, there were 566 employees.[13]

22
4.2. Fiscal policy

Fiscal policy refers to the use of government spending and tax policies to influence
macroeconomic conditions, including aggregate demand, employment, inflation and
economic growth.

4.2.1. Breaking down Fiscal policy

a. Fiscal policy is largely based on the ideas of the British economist John Maynard
Keynes (1883-1946), who argued that governments could stabilize the business cycle and
regulate economic output by adjusting spending and tax policies. His theories were developed
in response to the Great Depression, which defied classical economics' assumptions that
economic swings were self-correcting. Keynes' ideas were highly influential and led to
the New Deal in the U.S., which involved massive spending on public works projects and
social welfare programs.
b. To illustrate how the government could try to use fiscal policy to affect the economy, consider
an economy that's experiencing recession. The government might lower tax rates to
increase aggregate demand and fuel economic growth; this is known as expansionary fiscal
policy. The logic behind this approach is that if people are paying lower taxes, they have more
money to spend or invest, which fuels higher demand. That demand in turn leads firms to hire
more – decreasing unemployment – and compete for labor, raising wages and providing
consumers with more income to spend and invest: a virtuous cycle.
c. Rather than lowering taxes, the government might decide to increase spending. By building
more highways, for example, it could increase employment, pushing up demand and growth
as described above. Expansionary fiscal policy is usually characterized by deficit spending,
when government expenditures exceed receipts from taxes and other sources. In practice,
deficit spending tends to result from a combination of tax cuts and higher spending.
d. Economic expansion can get out of hand, however, as rising wages lead to inflation and asset
bubbles begin to form. In this case a government might pursue contractionary fiscal policy –
similar in practice to austerity – perhaps even forcing a brief recession in order to restore
balance to the economic cycle. The government can do this by reducing public spending and
cutting public sector pay or jobs. Contractionary fiscal policy is usually characterized by
budget surpluses. It is rarely used, however, as the preferred tool for reining in unsustainable
growth is monetary policy.

4.3. Funds Distribution

The Swiss Collective Investment Schemes Act (CISA 120) concerns foreign fund providers
distributing in Switzerland to qualified and non-qualified investors.
Those funds are required by law to appoint a Swiss representative and a paying agent and must
ensure correct legal documentation is in place and that it remains up to date.

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4.3.1. Addressed qualified investors

a. Once you appoint Oligo as your Swiss representative to address Qualified investors, the
following onboarding process begins:
b. You provide us with the required documents for the due diligence process.
c. Our analysts perform their due diligence checks.
d. We arrange for your payment agent service.
e. The contracts with Oligo and with the paying agent are signed.
f. An appendix is added to your Offering Memorandum to include Swiss-specific wording
mentioning the Swiss representative and paying agent.
g. Your fund is ready for distribution to Swiss Qualified investors.
Average time for the onboarding process: 2-3 weeks.
4.3.2. Addressed unqualified investors

a. Once you appoint Oligo as your Swiss representative to address Non-Qualified (retail)
investors, the following onboarding process begins:
b. You provide us with the required documents for the due diligence process.
c. Our analysts perform their due diligence checks.
d. We arrange for your payment agent service.
e. The contracts with Oligo and with the paying agent are signed.
f. The supervising authority of the country of domiciliation provides an original signed fund
certificate.
g. The fund prospectus (memorandum), the KIID, the annual and semi-annual audited reports
are translated and presented to FINMA.
An appendix is added to The Memorandum mentioning the Swiss representative and paying
agent.
h. Specific fund documents are signed by: the fund, the custodian, and the administrator and sent
to FINMA for approval.
i. FINMA requires up to 1 month to check and approve all documents.
j. The fund is authorized by FINMA and may be distributed to Swiss Non-Qualified (retail) as
well as qualified investors.
Average time for the onboarding process and FINMA approval: about 2 months.

4.4. Progressive, Regressive

4.4.1. Progressive

a. Switzerland is one of the world's top five socially progressive countries, according to a new
report.

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b. The alpine country came fifth in the 2016 Social Progress Index, which ranked 133 countries
based across 53 social and environmental indicators including the level of opportunity,
healthcare, education and tolerance.
c. Published on Wednesday by the US-based non-profit organization the Social Progress
Imperative, the index named Finland as the most socially progressive country in the world.
d. Placing fifth after Canada (2nd), Denmark (3rd) and Australia (4th), Switzerland scored
particularly highly for water and sanitation facilities, adult literacy rate and safety, including
its low level of violent crime.
e. But Switzerland fared badly when it came to the availability of affordable housing (ranking
24th) and the rates of obesity (62nd) and suicide (94th).
f. The Index also revealed Switzerland's relative weakness in areas including freedom of speech
(20th), freedom of religion (58th) and tolerance of immigrants (33rd), reflecting a global
challenge.
g. Tolerance and inclusion is one area “where even the more advanced countries can struggle to
score highly,” said the report.
h. “'Tolerance and inclusion' and ‘personal rights' are also less correlated with GDP per capita
while ‘environmental quality' improves only marginally as GDP per capita increases.”
i. Money has less to do with social progress than could be assumed, said the report. First placed
Finland has a much lower GDP ($38,535) than Switzerland ($55,260) yet fared better.
j. While social progress does tend to rise as GDP increases, “economic wealth on its own does
not explain social progress outcomes,” said the report.
k. In a statement, Michael Green, Executive Director of the Social Progress Imperative, said:
“The Social Progress Index proves that GDP is not destiny. We need more countries to be like
Costa Rica, which squeezes a lot of social progress out of its modest GDP.”[14]

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4.4.2. Regressive

This study concludes unambiguously that the tax imposed on gambling activities in Switzerland is
regressive. Lower income individuals contribute proportionally more to the total state revenues than
do higher income groups. Indeed, the Suits index shows a negative value of –0.184, indicating a
clear regressive tax pattern. The regression analysis corroborates this first result. The income
elasticity of 0.199 is clearly and statistically lower than one, providing further proof of a regressive
tax pattern. Decreasing income by 10% results in a decrease of only 1.99% in the gambling budget.
Therefore, the economic incidence clearly shows that the final distribution of the tax burden is
proportionally larger for individuals with lower incomes. Thus, this tax violates one of the main
qualities of a good tax in Switzerland, namely vertical equity. Vertical equity suggests that
individuals with higher income should have a larger tax burden. However, this is obviously not the
case in the present study. Another type of inequality is related to educational level. In the regression
analysis, this coefficient is found to be negative. This pattern shows that the more educated an
individual is, the less money he/she will spend on gambling. According to our analysis, state
gambling revenues are expected to rise if the population that has access to gambling is poorly
educated. These two results lead to the surprising conclusion that the revenues to the state from
games of chance will be higher if the population is poor and not well educated. This finding is in
line with the findings of Abt, Smith, and Christiansen (1985) [15]

26
4.5. Proportional Taxes

a. U S Tax System Vs. Switzerland Tax system – a historical or practical comparison: an

intellectual satiety
b. According to Swiss Tax Conference, Swiss tax system’s development is historical in nature
rather than a rational or theoretical one. A humbling statement of the noble body, indeed. With
Federal tax administration, 26 Cantons and 2,250 communes venturing to have a pie in the tax
collections of the great nation, mostly known in history for its beauty, great role in world wars
and its cheese, liquor or beautiful cows, Switzerland, obtained its tax system in Helvetic period
(1798 -1803). However, it claims to have formalized it with the foundation of the federal state
in 1848. So, let me take you directly to the web site of Swiss Tax Conference Information
Committee as under:
c. https://www.eda.admin.ch/content/dam/countries/countries-content/united-kingdom/en/FTA-
swiss-tax-system-48791-2017.pdf
d. Well, it is a pleasure even to directly quote everything from their web site but for easy
understanding and shortened version of things, I just write this article with great candor or
pleasure or both.
e. While Swiss Federal tax system (Confederation) also taxes income, though, mostly, from
sources like value added tax, stamp duties, custom duties and special consumption taxes, 26
Cantons (names listed at the end of this article) have their own tax laws, and tax income from
income, wealth, inheritance, capital, property gains and others, 2250 Communes thrive
communal taxes at their own discretion or tag along with supplements relative to Cantonal
basic tax scale.
f. Let me take you through the evolution of the tax system in Switzerland over the
last two centuries.
g. During 1849-1942
h. Custom duties, Military Service tax, Taxation of distilled, Spirits, War gains tax, War tax,
Federal stamp duties, extraordinary war tax.
i. During 1943 onwards till date
j. Direct Federal tax, Value added tax, Equalization tax, Luxury tax, Withholding tax, New
national defense tax, Mineral and automobile tax and lastly Casino tax.
k. Narrating the evolutionary tax system is intended to educate ourselves about advanced
countries” tax systems and stop complaining about our own.
l. Quoting liberally from the official publication” as already mentioned, the Confederation, the
cantons and even the communes levy taxes in Switzerland. However, the right of these public
bodies to collect taxes is restricted by the Federal Constitution (Cst). The aim is to distribute
fiscal sovereignty in such a way that the three public bodies do not impede one other and that
an excessive burden for taxpayers is prevented. Consequently, the Constitution gives the
Confederation the right to levy certain taxes and denies the cantons the right to do the same.”
m. Now that we are aware of the limitation of various bodies in relation to levying of taxes at
various levels or substantial areas relevant to their existence, as a vivid reader, let us go into
the basics of Swiss tax system [16].

27
5. Chapter 5: Trade
Trade involves the transfer of goods or services from one person or entity to another, often in
exchange for money. A system or network that allows trade is called a market. An early form of
trade, barter, saw the direct exchange of goods and services for other goods and services.

5.1. Imports

Switzerland imported US$268.5 billion worth of goods from around the globe in 2017, down by -
16.4% since 2013 and down by -0.2% from 2016 to 2017.
As of June 2018, Switzerland’s import purchases were valued at $139.6 billion up 5.2% compared
to the first 6 months of 2017.
Swiss imports represent 1.7% of total global imports which totaled an estimated $16.054 trillion
for 2016 (as of February 5, 2018).
From a continental perspective, 60% of Switzerland’s total imports by value in 2017 were
purchased from other European countries. Asian trade partners supplied 23.8% of import sales to
Switzerland while 9.3% worth originated from North America. Just 3.2% came from sources in
Africa.
Given Switzerland’s population of 8.2 million people, its total $268.5 billion in 2017 imported
goods translates to roughly $32,600 in yearly product demand from every person in the country.

5.1.1. Top 10 imports of Switzerland

The following product groups represent the highest dollar value in Switzerland’s import purchases
during 2017. Also shown is the percentage share each product category represents in terms of
overall imports into Switzerland.
a. Gems, precious metals: US$89.9 billion (33.5% of total imports)
b. Pharmaceuticals: $28.7 billion (10.7%)
c. Machinery including computers: $18.9 billion (7%)
d. Vehicles: $15 billion (5.6%)
e. Electrical machinery, equipment: $14.2 billion (5.3%)
f. Organic chemicals: $11 billion (4.1%)
g. Mineral fuels including oil: $8.2 billion (3%)
h. Optical, technical, medical apparatus: $7.7 billion (2.9%)
i. Plastics, plastic articles: $6.4 billion (2.4%)
j. Furniture, bedding, lighting, signs, prefab buildings: $4.4 billion (1.6%)
Gems and precious metals (down -9.8%) and organic chemicals (down -11.6%) were the only top
categories to post declines.[17]

5.2. Exports
a. Exports from Switzerland totaled US$299.6 billion in 2017, down by -16.3% since 2013. Year
over year Swiss exports decreased in value by -1.7% from 2016 to 2017.
b. As of June 2018, Switzerland’s exported goods were valued at $159.2 billion up 8% compared
to the first 6 months of 2017.

28
c. Based on estimates from the Central Intelligence Agency’s World Factbook, Switzerland’s
exported goods plus services represent 67.5% of total Swiss economic output or Gross
Domestic Product. The analysis below focuses on exported products only.
d. From a continental perspective, 46.6% of Swiss exports by value are delivered to other
European countries while 35.6% are sold to Asian importers. Switzerland ships another 14%
to North America with 1.8% going to Latin America excluding Mexico but including the
Caribbean. Just 1.1% of products shipped from Switzerland are destined for Africa.
e. Given Switzerland’s population of 8.2 million people, its total $299.6 billion in 2017 exports
translates to roughly $36,000 for every resident in that country.
f. Switzerland’s unemployment rate was 3.3% as of December 2017 down from 3.5% one year
earlier, according to Trading Economics.

5.2.1. Top 10 Exports

The following export product groups represent the highest dollar value in Swiss global shipments
during 2017. Also shown is the percentage share each export category represents in terms of overall
exports from Switzerland.

At the more granular four-digit Harmonized Tariff System code level, the number one Swiss
exported product is gold.
a. Gems, precious metals: US$84.6 billion (28.2% of total exports)
b. Pharmaceuticals: $70.3 billion (23.5%)
c. Machinery including computers: $23.7 billion (7.9%)
d. Clocks, watches including parts: $20.2 billion (6.8%)
e. Organic chemicals: $19.8 billion (6.6%)
f. Optical, technical, medical apparatus: $16.1 billion (5.4%)
g. Electrical machinery, equipment: $12.2 billion (4.1%)
h. Plastics, plastic articles: $5.1 billion (1.7%)
i. Perfumes, cosmetics: $3.3 billion (1.1%)
j. Articles of iron or steel: $3 billion (1%)

Switzerland’s top 10 exports accounted for 86.2% of the overall value of its global shipments.
Perfumes and cosmetics increased in value at the fastest pace, up by 11.9% in value year over year.
This upward trend was largely led by beauty or makeup preparations and preparations for the care
of skin (including sunscreen).
Tied in second place for improving export sales up 5.5% were iron or steel articles and machinery
including computers.
Pharmaceuticals posted the next fastest gain in value via a 4.2% improvement since 2016.

5.3. Trade Sector

Switzerland's economic and trade relations with the EU are mainly governed through a series of
bilateral agreements where Switzerland has agreed to take over certain aspects of EU legislation in
exchange for accessing part of the EU's single market.

29
  Swiss merchandise exports to the EU are concentrated on a few sectors, particularly
chemicals/pharma and medicinal products, machinery, instruments and watches.
 Switzerland is a very important partner of the EU for trade in services, in particular for
commercial services[18]

Both the EU and Switzerland are among each other's top destinations for foreign investment.

30
6. Chapter 6: Conclusion
In this report we briefly explain the Economy of Switzerland. At the end we conclude to the result,
the economy of the Switzerland is most modern economy. It has a stable economy yet it is not
heavily endowed with lots of natural resources the significant role is played by the service sector in
the economy of the Switzerland, particularly Swiss banking and tourism. The economy of the
Switzerland ranks first in the world in 2015. One main reason for this is the political neutrality in
the country enabling more foreign investments in the country as well. Unemployment rate of the
country is fairly low as the country’s job market is fairly flexible with a working population of 3.8
million
Switzerland has one of the most competitive economy in the world. It’s per Capita Gross Domestic
Product is $27100 which is highest in the Europe
Three main sectors of the economy are INDUSTRY, AGRICULTURE & SERVICES sector.
Switzerland is one of the most developed countries of the world. Switzerland is also a prime location
for international headquarters and management centers successful multinational firms from all over
the world have moved ton Switzerland over the past few years. Switzerland international banking
system set the foundation for a supportive and dynamic international environment. As a highly
networked economy, Switzerland benefits from global trade flows during the good times, and is
also a major beneficiary of increasing globalization. As far as its trading partners are concerned,
Switzerland is relatively well diversified in comparison with similarly sized countries.

31
 Refrences:
[1] “Switzerland: History.” [Online]. Available:
https://globaledge.msu.edu/countries/switzerland/history. [Accessed: 21-Jan-2019].
[2] “Switzerland | Facts, Geography, and History,” Encyclopedia Britannica. [Online].
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[3] “What Type Of Government Does Switzerland Have?,” WorldAtlas. [Online]. Available:
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[Accessed: 21-Jan-2019].
[4] “Berset voted Swiss President for 2018,” SWI swissinfo.ch. [Online]. Available:
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2018/43732768. [Accessed: 21-Jan-2019].
[5] “Switzerland - Agriculture and forestry,” Encyclopedia Britannica. [Online]. Available:
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[6] “Switzerland - Labour and taxation,” Encyclopedia Britannica. [Online]. Available:
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[7] B. Weder and R. Weder, Switzerland’s rise to a wealthy nation: Competition and
contestability as key success factors. Research paper/UNU-WIDER, 2009.
[8] “Switzerland GDP Growth Rate | 2019 | Data | Chart | Calendar | Forecast.” [Online].
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[9] “[Up-to-Date] Switzerland Gross National Product [1990 - 2018].” [Online]. Available:
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[10] “[Up-to-Date] Switzerland Tourism Revenue [Data & Charts].” [Online]. Available:
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[11] “Switzerland Inflation Rate | 2019 | Data | Chart | Calendar | Forecast.” [Online]. Available:
https://tradingeconomics.com/switzerland/inflation-cpi. [Accessed: 21-Jan-2019].
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[13] “Swiss National Bank (SNB) - Monetary policy.” [Online]. Available:
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[14] “Study: Swiss among world’s most socially progressive - The Local.” [Online]. Available:
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[15] D. Kohler, “On the Regressivity of Gambling Taxes in Switzerland,” Swiss J. Econ. Stat.,
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[16] “Comparison of U S Tax System Vs Switzerland Tax system,” TaxGuru. [Online].
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practical-comparison-intellectual-satiety.html. [Accessed: 21-Jan-2019].

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[17] D. Workman, “Switzerland’s Top 10 Imports,” World’s Top Exports, 01-Aug-2018.
[Online]. Available: http://www.worldstopexports.com/switzerlands-top-10-imports/.
[Accessed: 21-Jan-2019].
[18] “Switzerland - Trade - European Commission.” [Online]. Available:
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Jan-2019].

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