Swiss Economy 2020 and 2021 Outlook
Switzerland’s export oriented industry, the main source of its wealth, has been hard hit by the worlwide Covid19 pandemics. The impact varies considerably by sectors. The signifcant pharmaceutical and financial sectors e.g. were little or not affected. Compared to most other countries, the overall situation appears to be somewhat less "dramatic". The resilience is felt to be due to the relative sound financial standing supported by a comparatively liberal regulatory environment. The GDP topped 702 Billion Swiss Francs down 2.9 percent vs. the previous year. The negative growth in 2020 affected, in particular, the export oriented manufacturing sector such as the machinery, instrumentation and watch industry.
Key indicators such as the Purchasing Managers Index now show surprisingly strong signs of a recovery in 2021 driven, in particular, by exports to the US and China. Although multibillion federal and cantonal (state) support packages allowed companies to keep most of their employees qualified specialists are already in shortage.
Total cost of the overall federal and state financial support programs so far are estimated at some 60-70 billion CHF and still growing, mostly due to cover the "reduced worktime" programs many of which are still in effect.
Unemployment grew to 3.5 percent by early 2021 (ILO 5 percent) from soemwhat under 2 percent in 2019 - now slowly decreasing. The scheduled reopening of restaurants, event sites etc. as of June 2021 will result in a clear reduction.
The "rapid" recovery in combination of growing worldwide demand for raw materials, interrupted supply lines and higher transportation costs are raising inflationary fears. The Swiss consumer price index, as a result, is expected to go up. Per capita incomes, however, will remain among the world's highest with an attractive average purchasing power
The Swiss Franc kept its role as an international “Safe-Haven” currency. Massive interventions of the Switzerland’s National Bank (SNB) were required to slow down the inflow of foreign currencies. The USD dropped to 0.88 CHF (<12%) the lowest rate of exchange for many years.
The Pandemics has hit the travel trade to its roots. Experts expect future structures to be quite different than before. Traditional travel agencies may be replaced increasingly by start-ups making use of new technologies to what extent has to be seen. However, service and safety (incl. financial), will be high on the agenda based on recent experience. Swiss used to spend the equivalent of 16-17 billion USD on foreign travel before Corona. Nearly half a million have travelled to the US. annually for several decades. The Swiss purchasing power will remain high with a per capita income of over 82'000 USD in 2020/21. Not to forget an estimated 13-15 billion in new savings of unspent money during the pandemics. Money which potentially will be spent on future travel.
A true "normalization" is expected step by step starting as of June 2021. Long haul travel will take somewhat more time to recover than short distances, e.g. in Europe. Much will depend upon the signals from relevant destinations and the local health situation . The "joker" of the U.S. travel destination is expected to be its "credit" based on the large number of former visitors and their positive testimonials. They will serve as a catalyzer in keeping up the appetite for a U.S. trip. Much will depend upon relevant U.S. immigration conditions and the rate of exchange USD vs.CHF.
*Sources: BAK & KOF Swiss Economic Institute, Div. of the Swiss Federal Institute ETH Zurich May 20, 2021 WEW
Situation before Corona February 29, 2020
Demographic Structure 2018 - Population: 8.4 million, Growth 4 percent
Share of population working (age 18 - 65) 72.9 %, 2018 GDP USD 705b, Unemployment 2.4%
Summary in a Nutshell
Switzerland continues to enjoy one of the world's highest standards of living with relevant high incomes. Based on its GDP it ranks 19th in significance on a worldwide scale. The country's weath is based mostly on its century long political stability, high level of education and state-of-the art R&D. One of the main challenges is the strength of the Swiss Franc vs most other currencies, in particular, for its export oriented industry. It is the result of the Swiss Franc's role as a safe heaven currency. Industry has done an amazingly good job to cope with the situation. However, particularly less qualified jobs have been lost to low cost countries. Exports,account for nearly half of the Swiss GDP and grew 2018 by 3.7% topping $ 310b. In the first 7 months of 2019 exports reached $ 186, down 3 % compared to the same period of 2018. Inspite of nearly zero inflation salaries will keep increasing by 1-2% countrywide. They are now the highest in all of Europe. Further economic growth at this time is suffering from the economic slowdown in Europe and the trade disputes between major economic powers. Switzerland continues to enjoy a substantial trade surplus, although lower in 2019 than in the same period of 2018. Per capita income is at 78'816 $. The renewed weakness of the Euro and the pending trade disputes in 2019 remain a challenge.
2019 Economic Data
Swiss industrial exports represent nearly half of the country’s GDP. "Swissness" appears to be a brand which sells well worldwide. Lead by the powerfull, hightech pharmaceutical giants most companies continue to successfully streamline processes, improve productivity and cut costs. The machinery and watch industries, however, after full order books in 2018 seem to have a somewhat less optimistic outlook for 2019 and 2020, in particular. Interestingly, progress made in automation and digitalization appear to allow certain companies to move manufacture from abroad back to Switzerland, inspite of high local cost.
Switzerland’s inbound tourism, a significant economic sector, after a healthy recovery in 2018 struggles again with the fluctuations of the Euro which dropped in 2019 from a previous 1.15 to 1.08 CHF. It seems to impact, in particular, on visitors from price sensitive neigboring countries. Visitation on the other hand from the U.S. and and Asia are up. KOF, the prominent economic institute of Switzerland's top university „ETH“ predicts the GDP to fall from 2.4% in 2018 to some 1.4% in 2019. Worldclass R&D as well a high level of education, however, remain a joker in attracting foreign investors. Google, e.g. has its second largest R&D center worldwide in Zürich. Other IT leaders like Microsoft and Facebook have been following. The Swiss focus on high value added niche markets and innovation seems to provide the economy with an element of stability vs the world's fluctuations. Swiss industry ranks again among the top in the worldwide innovation ranking of WEF. Leading edge universities (the country boasts Europe's two top universities) and an "entrepreneur friendly" environment are a key. Last but not least the banking industry, the country's fourth ranking sector has adjusted to OECD standards and settled most of its tax disputes. Stability and security, typical Swiss qualities, remain a significant adventage for this particular sector and may explain its reputation as a "safe heaven".
Wages, although already among the world's highest, keep growing and provide for a healthy purchasing power. They continue to attract a significant foreign labor force. Some 1.2 million people from neighboring countries live and find work in Switzerland. An additional 320'000 cross the borders daily for work. "Little Switzerland" often referred to as an economic power house (see table below) boasts a GDP close to one fifth of Germany, Europe's biggest nation with an eleven times larger population. Swiss industry is the top foreign direct investor in the EU and ranks 7th as a direct investor in the US providing nearly half a million American jobs.
2019/20 Swiss economic and political position in Europe and outlook
Inspite of its small geographic size, Switzerland is Europe's seventh largest economy, the third ranking trading partner and the top foreign direct investor in the EU. Located in the very center of the European continent, with a multilingual, multicultural society Switzerland is not a member of the EU, inspite of its close historical, cultural and linguistic relations. EU membership is presently rejected by over 80 percent of the population. However, nearly 25 percent of the resident population are foreign nationals, mostly from the EU. The country is an important workplace for some 1.5 million foreigners including some 320'000 crossing the borders daily for work. The Worldbank estimates that they transfer yearly the equivalent of 26.5b USD to their home countries. Swiss industry has a well established worldwide commercial network. It is the result of the historical need to compensate the small home market since the begin of industrialization. Over 40 percent of exports are now going to countries outside of Europe, nearly double of a few years ago. However, the EU at the Swiss doorstep remains the main single trading partner.
Wheras Swiss bilateral relations to most European nations are excellent, relations to the EU per se remain somewhat less harmonious. The Swiss political system known as "direct democracy" (allowing citizens to decide about taxes, regulations, agreements etc.) proves to be hardly compatible with the EU's goals of further political integration and centralization, in particular. Tensions have increased due to EU pressure for the conclusion of a "framework agreement" trying to closer integrate Switzerland into the EU's legal structures. Inspite of the obvious economic "win-win" situation growing political demands are now an issue. A potential massive loss of sovereignty in key matters will be difficult to accept by the Swiss voters who will have the last word on such an agreement. Interestingly, many international experts see Switzerland with its four official languagues and multicultural society as model for a European Union.
(Revised February 2020)
Profile of Swiss Travellers
The small size of the country has forced the Swiss to look beyond the borders, in particular since the beginning of the industrialization in the 19th century. Most speak one or several languages of the adjacent countries facilitating cross border traffic and communications. Some of the old established international networks still play a role, particularely in Asia.
Swiss, as a result, are ardent travellers inspired by their multilingual resp. multicultural society with 4 official languagues. Some 25 percent of the resident population are foreigners. Language barriers are low. English is widely spoken. Most are well informed about international politics and relevant issues, particularly in major countries and of Switzerland's neighbors. People enjoy ecaping the "narrow borders" of their country and make use of their purchasing power. In 2018 each resident did an average of 3.5 foreign trips with at least 3 overnights They spent an average of $ 258.00* per day and person (domestic and foreign travel). Swiss appreciate service, punctuality and quality and are willing to pay for it. They tend to travel individually or in small groups, enjoy meeting the local population and avoid crowds.
Booking behavior: 71 percent of all travel was booked via the internet. This includes bookings on the websites of travel agencies, resp. TO's which seems to be a growing trend (+2%). The percentage of "self-organizers" dropped in 2018 to seven percent from 13 percent in 2014. About 27 percent use the personal service of travel agencies the sales of which topped USD 7 billion in 2018 Long haul and complex travel is often booked via travel agencies for reasons of safety, support and comfort. The German speaking Swiss seem to be more safety minded than their French or Italian speaking counterparts. Many young people book at travel agencies to overcome limitations in the use of credit cards
*average exchange rate March 2018: 1.00 USD = 0.99 Swiss Francs.
10 most popular foreign destinations of Swiss travellers by age in 2018
|Age||18 - 24||25 - 29||30 - 34|| 35 - 39
|| 40 +
|10.||Arab Emirates||Canada||Canada|| Tunisia
Swiss arrivals in the US: 2019 until October: 404'911 (+3.1%) over same period of time in 2018
Total worldwide Swiss spending for out of country travel in 2018 is estimated to top USD 16.4 billion.
Behavior of Swiss travellers by gender and language/cultural region:*
Men were found to spend some 25 percent more when travelling than women.
Number of annual trips abroad* taken by: German* speakers: 2.9; French* speakers: 2.4;
Italian* speakers: 1.8 (*Swiss nationals)
Access to the internet: 93 percent of the Swiss population uses the internet regularely
as a source of information
Source: Swiss Federal Office of Statistics
Major positive and negative factors influencing travel decisions in 2018
Booking preferences for all travel
The Swiss travel trade consists of 1100 so-called Class A and about 450 Class B travel agencies.
Largest companies include:
- Hotelplan Group - Kuoni Travel (DER)
- TUI Suisse - Knecht Reisen AG
- FTI - Globetrotter
Average margine 15.6% (travel agencies). Sales grew 2017 by 3.3 percent over the previous year. Travel agencies charge their clients a handing resp. counselling fee of $ 60.00 which may be waived depending the total cost of a package.
Revised April 2020
A total of 404'911 people from Switzerland visited the U.S. by October 2019 or 3.1% percent more than for the same period of time in 2018. The renewed upwards trend seems to be confirmed by the steady increase since 2017 with a plus of 7.12%! The analyses below over the past 25 years shows the fluctuations but over all a very stable market with an all time record of over 536'000 arrivals in 2015. The sharp drop in 2000 time was triggered by the value of the USD which topped 1.60 Swiss Francs followed by 9/11 in 2001. The renewed increase in arrivals is of particular interest considering the critical media coverage of U.S. politics in recent years. Our outlook remains clearly positive although the U.S. is no longer the kind of "bargain destination" it used to be some years ago. The focus of our promotional programs is on educating the local trade to improve clients counselling and service. A goal is to guide travellers also to destinations and activities somewhat off the beaten tracks which is one of the challenges of the mature Swiss market. A large percentage of Swiss visitors have been in the US several times and, as a result, are seeking new things to see and to do.
As of 2018 a total of 15 U.S. cities are accessible from Switzerland by means of non-stop flights. The new destinations such as Denver or San Diego are ideally placed to allow attractive one way trips avoiding crowded airports and domestic flights. The Swiss appreciate the comfort of reaching their destinations without changing planes. We consider this a strong incentive to consider just another U.S. trip, in particular for the many "repeaters"
An recent analyses shown by means of below graphic shows that Swiss travel to the U.S. is mostly driven by the rate USD vs. CHF. Political events such as the change of an Administration etc. tend to be less important
Swiss Arrivals 1994 - 2019
2019 Annual arrivals: 474'550
|Rate of exchange applied: 1 U.S. $ = 0.99. Swiss Franc.
|AIRLINES WITH DIRECT SERVICE BETWEEN THE U.S. AND SWITZERLAND|
||Ex Zurich||Ex Geneva|
|Swiss Intl. Airlines||Boston, Chicago, New York, Miami, Los Angeles, San Francisco||New Yorknnnnnnnn|
|American Airlines||New York|
|Washington D.C., Newark NY, San Francisco CA
|Delta Air Lines||Atlanta, New York|
|United Airlines||New York||New York|
||Tampa Bay, FL; Las Vegas, NV; San Diego, CA, Denver CO
Lengths of stay 2017 (est. based on 2016 data)
|**(49% staying less or longer than 10 days)||* source US DOC|
Profile of averageSwiss traveller to the U.S.
Swiss tourists to the US like to travel individually or in small groups with friends. They enjoy the well developped US travel infrastructure which most consider a “trademark” of the mobile American society. It allows them to be creative themselves and do some "own" planning on site. Larger groups are now mostly special interest such as senior citizens associations, readers travel/news-papers etc. The average Swiss traveller is well informed about U.S. politics and life. Most have an above average purchasing power due to high incomes. The Swiss Franc kept its strength as opposed to the Euro. Spending per person and day in the U.S. is USD 395.00. Swiss attach importance to punctuality, quality of service, food and good accommodation and are willing to pay for it. Most speak at least basic English. In recent years the U.S. increasingly became a popular destination for family holidays shown by the number of arrivals peaking in July (Summer School vacation). The latest trend, however, is to enjoy the warm summers at home and move foreign travel, longhaul in particular, into Fall. It is made possible by longer Fall school vacations which were extended at the expense of the Summer vacations. Worldwide security problems, in particular in some popular destinations, are of concern for elderly or senior people. However, the U.S. is still mostly considered a "safe destination.
|What are Swiss travellers looking for in the U.S.?
|The majority of Swiss visiting the U.S. enjoy meeting Americans. They like their easy going ways and accessibility. Big cities with cultural and sports events, shopping, sightseeing, restaurants are popular but also the typical friendly hospitality of American small town communities and their lifestyle. Cities of particular interest due to their fascinating multiethnical, cultural and historical background are San Francisco, New Orleans, Miami, Boston, Chicago and New York. Nature and wildlife (national parks and forests); native Americans; Western lifestyle (horses, BBQ, dude farms); outdoor activities (jeep tours, river rafting, helicopter rides, biking). The U.S. is becoming a viable alternative to typical beach vacation destinations located in politically instable and potentially insecure world regions. Typical American sports (rodeos, baseball, American football) which are less known in Switzerland are most popular among Swiss travellers., They enjoy the excitment at such events. American hospitality is an asset and an occasional touch of American nostalgia is appreciated, in particular by people of 45 years of age and more... The Swiss are open to new, less known regions, states and parks - somewhat off the tourist mainstream. This also applies to whole regions, cities, hotels etc. off-the-beaten-tracks.
|Where do they go?|
You may find Swiss all over, increasingly off the beaten tracks. Swiss like to travel on their own and often they make complementary arrangements on site - where they like it.. (event bookings, extensions, excursions). Authenticity is important. The high percentage of repeat visitors is reflected by the interest in less known or new destinations. Popular states and regions are: New York (NYC) California, South West (AZ, UT, NM, NV), Florida, Alaska, New England States South (FL, GA, SC, LA, KY, TN), Colorado, Wyoming, Montana, Hawaii, Oregon, Wash. State, Texas, Mid-Western States/Great Lake States.
Growing market for competent travel agency service and counselling
The study also showed a 3 percent increase of bookings at travel agencies by young and middle aged people - a reverse trend which has to be watched. The worldwide security challenges may have a positive impact on U.S. travel. Due to security concernes a more people also decided to remain in Switzerland per se.
|Local Promotional Opportunities|
|Visit USA Seminar - Established annual trade event focussing on education and updates on the USA, clients destination counselling, updates and networking with relevant U.S. partners and their representatives. The event is also an ideal opportunity to introduce new products on the Swiss market. Attendance approx. 400 from around the country. The US is represented by an average of 50 - 60 partners (destinations, attractions, TO's, airlines etc. The one day program includes a total of 12 workshops as well as presentations in the plennary and individual meetings (market place) The seminar is preceeded by a two months "warm-up" online "Knowledge Test". Event languages: German & English (workshops/presentations)
|USA Road Show - Annual event in Fall covering within two days 4 cities in German speaking and French speaking Switzerland on the third day. The French speaking part will be combined, for the first time, with TTW Suisse Romande in Montreux, a trade event which attracts the French speaking travel professionals. Program consists of workshops in small groups. Exhibitors include max. 12 US partners and attendance is about 220 local travel industry specialists. Presentations can be given in German/English and French/English in the French speaking part of the country.
|Miscellaneous events in cooperation and support of TheBrandUSA and other partners|