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In Hollywood movies, the Swiss banking center is regularly portrayed as a bastion of swindlers. It enjoys a good reputation among customers for decades. However, the Swiss banking center is gradually losing its importance for the economy. Other industries have performed better, as research has shown.
According to the State Secretariat of Economic Affairs, banks created a value of CHF 36.4 billion in 2021. That’s just 4.9 percent of gross domestic product (GDP). Before the financial crisis, banks contributed just under eight percent of GDP. With the takeover of Credit Suisse by UBS, the importance of the sector seems to decrease again. The Swiss banking center’s leading position as an international access point for wealth management is shaky. It grows in the UK, USA and Singapore. “Other sectors are now experiencing growth, such as pharmaceuticals or healthcare,” economist Alexander Rathke (44) from the Center for Economic Research (KOF) at ETH Zurich said in an interview with Blick.
Swiss business towing
While the banking business was stagnant, insurance companies have grown over the past decade, contributing 4.1 percent to GDP. Here, too, Switzerland is at the forefront of the international arena with the world’s largest reinsurer Swiss Re.
With a 6.3 percent GDP share, the pharmaceutical and chemical industry has already surpassed the banking industry. Pharmaceutical giants such as Novartis, Roche and Lonza are among the most important growth engines in the country. New companies like Ten23 Health, founded in May 2021 and headquartered in Basel, appear regularly. Starting with two employees, the company now employs 154 people at its two locations in Basel and Visp VS, company founder and CEO Hanns-Christian Mahler (51) told Blick. The company specializes in sterile filling of complex active ingredients.
According to Mahler, the high level of education and attractiveness for foreign workers spoke in favor of Switzerland as a location: “General conditions in Switzerland are consistently positive.”
Pharmaceutical products and blockbuster watches
With start-ups, large companies and a wide network of suppliers, the pharmaceutical industry has grown by an average of 5.9 percent over the years, thus providing a significant boost to Switzerland’s industrial position. “The industry has shrunk sharply in most countries in Western Europe, but in Switzerland we have managed to hold the level,” says economist Rathke. Industry still accounts for 18 percent of economic output.
The watch industry, which is often declared dead, has been experiencing a second spring for two years. The industry has had to react to developments such as smartphones or smart watches that have made traditional watches unnecessary for many. As Karine Szegedi (50), luxury goods specialist at consulting firm Deloitte, puts it, watchmakers rely on “craftsmanship” and “innovation.” The result is impressive: Last year, Swiss manufacturers exported watches worth 24.8 billion francs abroad. Record!
The number of watches sold has decreased significantly compared to 2019, but today the focus is elsewhere: “We see Swiss watch houses increasingly operating in the high-priced luxury segment, which in itself is extremely crisis-proof,” says Szegedi. . The expert expects this positive development to continue.
Commodity trading with a big jump
The mechanical, electrical, and metal industries are completely different: they’ve had to give up a bit over the last decade. “In the past, the appreciation of the franc made it difficult for many companies to maintain their international competitive position,” says economist Alexander Rathke. On the other hand, the current strength of the Swiss franc is hardly a problem. This is due to high inflation abroad, as companies can set price increases above the Swiss franc value.
The construction industry is equally ahead of banks and the healthcare industry and is likely to outperform financial institutions in the next few years. The population is aging and at the same time, technological progress in medicine is advancing. “With the high level of prosperity we have, people want to participate in this development,” says Rathke.
Despite losing its importance in the banking business, Switzerland remains a hub for large amounts of money: “Commodity trading has grown tremendously over the past decade,” says Rathke. Commodity groups such as Vitol, Glencore and Cargill are based in Switzerland and contributed 8.5 percent to economic output last year. After the financial crisis and the CS debacle, Switzerland is no longer a banking country.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
