Country Report Switzerland December 2009

Outlook for 2010-11

• The key political and economic issue in the outlook period will be the after-effects of the recession in 2008-09 and the emergence of the economy from the downturn. The political scene will be relatively stable.
• Switzerland's large and economically strategic financial sector faces structural changes, and is expected to shrink in terms of size and contribution to growth.
• The Swiss People's Party (SVP), the largest in parliament, will be under-represented in government, given its parliamentary strength. The issue will not be resolved fully until the general election in October 2011.
• Financial services regulation is set to see significant changes, including a raising of capital ratio requirements and some regulation on remuneration.
• The public finances are set to fall into deficit in 2009-11. The government is looking to restore the federal finances, but balancing the general government budget will also depend on the performance of the municipalities and cantons.
• The central bank will retain the option of unorthodox monetary policy measures to fight deflation, but in 2010-11 it should be able to roll back some of the measures put in place earlier in the downturn.
• GDP will have contracted by an estimated 1.6% in 2009, and will grow by 1% in 2010 and 1.5% in 2011. Unemployment is expected to rise further in 2010, and investment and exports will expand in 2010-11 from very weak levels.

Monthly review

• The Swiss electorate has convincingly backed a constitutional ban on the construction of minarets. The referendum was opposed by most major parties, except the SVP, as well as by the government and business groups.
• The referendum has aroused fears that the ban may conflict with constitutional stipulations on non-discrimination and offend Muslim countries.
• Migration from the EU has become a more controversial political topic, as unemployment has risen, and the government is considering reintroducing quotas on the free movement of labour between Switzerland and the EU.
• Further details have been published of the out-of-court settlement between the Swiss and US governments, which relieved a large Swiss bank, UBS, from prosecution in return for Switzerland passing client account data to the US.
• The Swiss economy moved out of recession in the third quarter of 2009, with GDP growing by 0.3% quarter on quarter. This mirrored the performance of the euro area, although Switzerland's downturn has been much shallower.
• Private consumption showed remarkable strength, and investment, exports and imports all bounced back from their second-quarter lows.

Source: Country Report

This report covers the following industry codes:
SIC Code: 15;65;60
NAICS Code: 23;53;52

• Highlights
• Outlook for 2010-11: Domestic politics
• Outlook for 2010-11: International relations
• Outlook for 2010-11: Policy trends
• Outlook for 2010-11: Fiscal policy
• Outlook for 2010-11: Monetary policy
• Outlook for 2010-11: International assumptions
• Outlook for 2010-11: Economic growth
• Outlook for 2010-11: Inflation
• Outlook for 2010-11: Exchange rates
• Outlook for 2010-11: External sector
• Outlook for 2010-11: Forecast summary
• The political scene: Anti-minaret referendum vote creates constitutional dilemma
• The political scene: Swiss voters reject a ban on the export of armaments
• The political scene: EU migration to Switzerland becomes more controversial
• Economic policy: Details of out-of-court settlement with IRS released
• Economic policy: FINMA amends financial services remuneration policy
• Economic performance: Third-quarter GDP data herald end of recession
• Economic performance: Rebound in investment is genuine, but overstated
• Economic performance: Domestic demand components support growth
• Economic performance: Financial services sector is past or close to trough
• Economic performance: Quality of life index: Switzerland
• Data and charts: Annual data and forecast
• Data and charts: Quarterly data
• Data and charts: Monthly data
• Data and charts: Annual trends charts
• Data and charts: Monthly trends charts
• Data and charts: Comparative economic indicators
• Basic data
• Political structure