Switzerland's economy: selling what has almost no weight

What a country without coal chose to make

The federal state dates from 1848, and well before it the city cantons of Zürich, Geneva and Basel had built themselves on industry and trade while the rural valleys stayed poor. Machine production began at St Gallen in 1801, with the third generation of machines imported from Great Britain. There was no significant coal under the ground and a great deal of falling water above it, so hydraulic power did the work steam did elsewhere. By 1814 the power loom had largely replaced hand weaving.

Textiles were what the 19th century built. In Basel the industry was textiles, silk among them, and women made up 44% of wage earners in 1888, nearly half of them working in the mills. The proportion of women in the workforce was higher between 1890 and 1910 than it was in the late 1960s and 1970s. The first railway opened between Zürich and Baden in 1847, and more than 1,000 kilometres of track were laid by 1860, barely coordinated at all because the political system that authorised them was decentralised.

Banking and tourism began in the same decades. What the 20th century added was scale: in the 1940s the economy profited from increased export and delivery of weapons to Germany, France, the United Kingdom and other European states, and Swiss production facilities came out of the war undamaged while its neighbours' did not. Annual GDP growth averaged 5% through the 1950s and 4% through the 1960s, and total energy consumption roughly doubled in each of those decades.

Then two long flat stretches. GDP contracted by 7.5% across 1975 and 1976 after the 1973 oil crisis, and in 1974 three nationwide car-free Sundays banned private transport outright. Industry still employed about 46% of the labour force in 1970; the recession of that decade is when services took the economy over. The 1990s were flatter still, with a three-year recession from 1991 to 1993 in which output fell by 2%, average annual growth of 0.6%, and unemployment reaching 5.3% in 1997 after decades below 1%.

How chemicals became half of what leaves

The chemicals and pharmaceuticals industry sells more than 100 billion Swiss francs abroad every year and accounts for roughly half of all Swiss exports and about 7% of GDP, on figures published by the federal foreign ministry in 2023. It employs over 75,000 people. Around 1,000 firms operate in it, concentrated near Basel, Zurich, Zug and Lake Geneva, and although Roche and Novartis carry the sales figures, nearly half of everyone employed in the sector works for a small or medium-sized enterprise.

The origin is the textile trade the sector eventually outgrew. The first chemicals plants of the 19th century made dyes for the mills, the industry then moved to serums, vaccines and drugs, and the pharmaceutical half has grown faster than the chemical half since 2000. Pharmaceutical companies alone invested over 6 billion francs in research and development in 2021. Switzerland also hosts 20% of Europe's life science companies.

What leaves is physically small. Medicaments were 13% of Swiss exports in 2017, heterocyclic compounds 2.2% and orthopaedic appliances 2.1%, and most of it goes to the European Union. The agricultural products the country is known for abroad barely register in the trade figures: cheese was 0.23% of exports in 2017, chocolate 0.35% and wine 0.028%.

Why watches survived the quartz decades

Watchmaking traces to Geneva in the mid-16th century, when Calvin's prohibition on wearing jewellery turned goldsmiths and jewellers to a different use for the same skills. The first wristwatch came in 1926, followed by quartz and waterproof movements. In the 1970s and 1980s battery-operated watches and competition from Japan put the industry into a crisis it came out of by consolidating, and exports went from just over 4 billion francs in 1986 to more than 20 billion by 2015.

What survived sells very little by count and a great deal by price. About 16 million Swiss watches are exported each year, half to Asia and the other half to Europe and the United States, at an average of more than 1,500 United States dollars a piece, and wristwatches generate 95% of the industry's export revenue. In 2011 watch exports reached nearly 19.3 billion francs, up 19.2% on the previous year, and by 2022 the industry was worth over 24 billion francs. It employs 60,000 people across roughly 700 firms in Geneva and the Jura cantons and produces about 4% of GDP.

Concentration cuts both ways in a business of this kind. In July 2024 the Swatch Group reported annual profits down by 70%. The brands are held by a small number of groups, among them Swatch Group, Richemont and LVMH Swiss Manufactures, with Rolex and Patek Philippe outside them.

How goods pass through without arriving

More than 900 commodity trading companies are based in Switzerland, around Geneva, Zug and Lugano, employing 10,000 people directly and a further 35,000 indirectly. The trade was worth 4% of GDP in 2022. Over a third of the global trade in crude oil is handled by traders based in the country, along with about 60% of metals and grains in 2022, and the same firms trade sugar, cotton, oilseed, coffee and cereals.

Most of these goods never reach Switzerland. They are bought and sold before they arrive, an activity the trade calls merchanting, and the money it turns over grew from 2 billion francs in 2002 to over 80 billion francs in 2022. The business is older than the growth suggests: Henri Nestlé, Salomon Volkart and André & Cie were trading commodities in the first half of the 19th century, the Société Générale de Surveillance followed in the early 20th, and Cargill and Alcoa arrived from about 1950. Between 2013 and 2019, corporate loans and revolving credit facilities granted to five Swiss energy trading houses exceeded 360 billion United States dollars.

Gold is the exception that proves how the rest works, because gold does physically arrive. The refiners are Valcambi, PAMP, Argor-Heraeus and Metalor, and none of the metal they handle comes out of Swiss ground. About 24% of Swiss exports were gold bullion or coins in 2017, and on the same trade figures gold was 21% of imports. The country buys the metal, refines it and sells it again.

The sector attracts criticism over transparency, money laundering and human rights, given that some commodities come from politically unstable places, and the federal foreign ministry's own account of the industry says so. Swiss legislation sets requirements for large companies on environmental practice, working conditions, human rights and the prevention of corruption, and the government supports the Swiss Better Gold Initiative.

What the banks hold and who asked questions

The financial sector was 11.6% of GDP in 2003 and employed about 196,000 people, 136,000 of them in banking, which was 5.6% of the total workforce. Swiss banks managed 5.4 trillion francs in 2009. An estimated 28% of all funds held outside their country of origin sit in Switzerland. Foreign banks operating in the country managed 870 billion francs in May 2006 and an estimated 960 billion in 2014. The federal foreign ministry put the financial centre's contribution at around 9% of national value added in June 2026.

The work divides by city. Zurich does banking and insurance, Geneva does wealth management, commodity trading, trade finance and shipping, and Basel has housed the Bank for International Settlements since 1930. The BIS chose Switzerland for its neutrality, which mattered to an organisation founded by countries that had been on both sides of the First World War.

Why an expert commission examined the wartime accounts

In December 1996 the Federal Assembly resolved unanimously to establish an Independent Commission of Experts to investigate the volume and fate of assets moved to Switzerland before, during and immediately after the Second World War. Its mandate covered the gold trading and foreign currency transactions of the Swiss National Bank and of the private commercial banks; all assets moved into the country, including insurable values and cultural assets belonging to victims of the Nazi regime as well as to its perpetrators and collaborators; the relations of Swiss industrial and commercial companies with the National Socialist economy, including aryanisation measures and the exploitation of forced labourers; and Swiss refugee policy in its connection with those financial relations.

Parliament granted 5 million francs in December 1996 and a further 17 million a year later. The commission seated nine members, four Swiss and four from Britain, Israel, Poland and the United States alongside its president, and the government committed to publishing its reports in full. Legal and contractual obligations of secrecy were waived for its staff, and a general duty to preserve and produce documents was imposed on individuals and companies alike. An interim report on gold transactions appeared in May 1998, a report on refugee policy in December 1999, and the final report with the last seven studies on 22 March 2002.

What changed after Credit Suisse failed

Credit Suisse collapsed in 2023 and was acquired by UBS. On 6 June 2025, after waiting for a report from a parliamentary investigation committee, the Federal Council set out 31 proposed amendments known as the Too Big To Fail measures. Four banks are designated systemically important: UBS, Postfinance, Raiffeisen and the Zurich Cantonal Bank. Among the proposals is a requirement to finance the purchase of and continued involvement in foreign subsidiaries fully with capital instead of partly with debt, which an expert report commissioned by the State Secretariat for International Finance expects to raise borrowing costs temporarily and to leave the banks better able to absorb a crisis. The first stage is expected to enter into force in 2027 at the earliest and the last in 2028 or 2029.

Why the one heavy sector is protected

Agriculture is where the pattern reverses. Switzerland subsidises more than 70% of its agriculture against 35% in the European Union, on OECD figures, and the 2007 Agricultural Program raised subsidies by 63 million francs to 14.092 billion. In 2016 the government spent about 5.5% of its total budget, over 3.5 billion francs, on supporting food production. Around 48,000 farms work about a million hectares as of 2023, one in six of them organically, and more than half of that land is natural meadow and pasture.

The protection buys supply in named goods. Between 90 and 100% of potatoes, vegetables, pork, veal, cattle and most milk products are produced inside the country, and domestic production covers about 60% of all food consumed. It also buys high prices. Food price levels stood at 145% of the EU-25 index in 2007 and housing at 171%, against 104 and 113% in Germany.

Since 1998 the subsidies have been conditional. A farmer applying for one must hold an environmental management certificate showing balanced fertiliser use, at least 7% of farmland kept as ecological compensation area, regular crop rotation, measures to protect animals and soil, and limited and targeted pesticide use. About 1,500 farms leave the business each year. Organic farms grew by 3.3% between 2003 and 2004 and organic sales rose 7% to 979 million dollars.

What the workforce costs and what it earns

Slightly more than 5 million people work in Switzerland, and about 25% of employees belonged to a trade union in 2004. Some 600 collective bargaining agreements are in force and are renewed without much trouble. There is no nationwide minimum wage across sectors: a ballot initiative in May 2014 that would have set one at 22 francs an hour, about 4,000 francs a month, took 23.7% of the vote, and voters in the canton of Geneva approved a cantonal minimum of 23 francs an hour on 27 September 2020.

Two unemployment series exist and they do not agree, which is worth stating before either is quoted. The registered rate ran at 1.7% in June 2000, 4.4% in December 2009, 3.2% in 2014, 2.5% in 2018 and 2% in 2023. The rate measured on the International Labour Organization definition, which counts people looking for work whether or not they have registered, rose from 4.6 to 4.9% in the second quarter of 2026, while the European Union figure on the same definition held at 5.9%.

Median gross income was 6,788 francs a month in 2022, about 7,467 United States dollars, and 61% of the population earned less than the mean. The Federal Statistical Office reported a Gini coefficient of 31.5 for 2023. Average wealth per adult was 561,900 dollars in 2016; the UBS Global Wealth Report gave an average of 910,382 dollars for 2026 against a median of 145,555. The richest 1% held 35% of the wealth in 2015 and 42% in 2023.

The floor is measured too. About 8.2% of the population lives below the national poverty line, drawn at 3,990 francs a month for a household of two adults and two children, with a further 15% at risk; 4.3% are working poor, and roughly 12% of workers hold a job classed as low-paid, many of them women and foreign nationals. As of 2022, one in seven pensioners was living in poverty, on a separate line of 2,279 francs a month, with 46,000 already below it and 295,000 close to it. Resident foreigners were 26.3% of the population in 2023. One study estimates a shortfall of hundreds of thousands of workers by 2030.

How Switzerland trades with a union it declined

Voters rejected the European Economic Area Agreement in 1992, and the government turned to bilateral negotiation instead. Four years of talks produced the Bilaterals, covering research, public procurement, technical barriers to trade, agriculture, civil aviation, land transport and the free movement of persons. Parliament endorsed them in 1999, a referendum approved them in May 2000, and they entered into force on 1 June 2002. A second round was approved by the electorate on 5 June 2005. Switzerland joined the European Free Trade Association in 1960 and the World Trade Organization in 1995, and took until 2002 to join the United Nations.

Apart from agriculture, the barriers between the two markets are small. Germany took 17% of Swiss exports and supplied 20% of imports in 2017, the United States took 10% and supplied 7.8%, and China took 9.2% while supplying 4.8%. India, France, Hong Kong, the United Kingdom and Italy each took between 4.4 and 7.3% of exports that year. Swiss and European Union finance ministers agreed in June 2003 that Swiss banks would levy a withholding tax on the savings income of European Union citizens, rising to 35% by 2011, with 75% of the proceeds passed on.

The exchange rate did some of the work that no sector did. Capital held in Swiss francs more than doubled its value in dollar terms during the 2000s, and particularly during the 2008 financial crisis, without any increase in what it bought at home. Gross domestic product then grew 1.5% in 2024 and 1.6% in 2025 at the previous year's prices, on domestic demand up 2.5%, according to the Federal Statistical Office.