With informal conversations surrounding a free trade agreement, the bilateral relationship has much to gain
What are the Swiss economy’s strengths?
Switzerland has proven itself very resilient in the face of multiple global economic downturns. Our federal government has been working with a budget surplus for the past 12 years, before COVID-19, and the debt-to-GDP ratio remains quite low. Switzerland has one of the most global economies in the world. It remains solid, with vast FDI, and is strongly diversified with nearly 20 percent represented by manufacturing.
What challenges do you see to Switzerland’s macroeconomic stability?
Switzerland has three core challenges. The first is complacency. Having consistently been one of the best business locations, we increasingly see signs of complacency. Complacency is eroding Switzerland’s attractiveness. Today there are a few elements on which we see evident weakening. While Switzerland remains top of its league, other nations have geared up, at a time Switzerland has become less proactive, and less amiable as a nation when attracting businesses. This is an important challenge that is reflected through anti-business initiatives leading to votes that could change the Swiss constitution, as well as a series of reform blockages in immigration, social systems, health care, and our relationship with the EU. The second challenge for Switzerland is the great dependence on exports, and the third is a general exposure to global trade. As a small, open economy, should the skirmish between the USA and China turn into a full trade war, Swiss assets and the Swiss economy are heavily exposed.
What is your outlook for Swiss-American relations?
Trade and FDI figures in both directions have been growing at over 10 percent per year for the last 15 years, and the outlook for Swiss–American relations remains fantastic. Cooperation between the two nations is very close, with Switzerland even representing the USA’s interests in Iran and recently in Venezuela. Switzerland has all reasons to look positively to a new Biden administration. Although Switzerland has a trade surplus of nearly USD 20 billion with the USA in goods, which is often highlighted, this does not tell the whole picture. The USA enjoys a substantial trade surplus in services. Swiss investments in the USA surpass USD 330 billion, while American investments in Switzerland reach USD 110 billion. Swiss companies employ half a million in the USA, while American companies have created 100,000 jobs in Switzerland. Swiss companies spend nearly USD 10 billion in R&D in the USA, while the USA only invests about USD 1.5 billion in Switzerland. So it is clearly a win-win relationship, with an advantage for the USA. The one big opportunity moving forward is to finally begin formal Free Trade Agreement negotiations.