Switzerland is commonly thought-about a fortress in opposition to financial downturns – however specialists concern even the would possibly of the Swiss franc could possibly be introduced crashing down by Germany’s financial woes.
Whereas different industrialised nations grapple with inflation, unemployment, and geopolitical tensions, the Swiss financial system continues to outperform expectations.
In line with the SonntagsZeitung, specialists predict that Switzerland’s financial system will develop considerably quicker in 2024 than neighbouring international locations and even outpace the USA.
It’s anticipated to develop by 1.1 % within the coming 12 months – however its booming begin to 2024 could possibly be beneath risk from the uncertainty surrounding Germany’s price range deficit.
Dubbed the “sick man of Europe” for its present troubles, there are fears Germany’s potential austerity measures might have a cascading impact on Switzerland, given the shut financial ties between the 2 international locations.
Sarah Lein, professor of economics on the College of Basel, emphasised the affect of world occasions on the Swiss financial system.
She mentioned: “Lately, we have now skilled crises unprecedented because the Second World Struggle, such because the pandemic, the outbreak of warfare in Ukraine and the rise in power costs.
“However Switzerland has weathered all these crises comparatively properly. This makes me optimistic for the longer term: the Swiss financial system is extra resilient than we predict. The most important threat to the Swiss financial system, for my part, is Germany.”
Regardless of the lingering results of the COVID-19 pandemic and numerous geopolitical crises, Switzerland has not solely weathered the storm however is experiencing pre-pandemic development ranges.
In stark distinction to the US and the eurozone, the place inflation and unemployment charges are anticipated to rise, Switzerland maintains an inflation price of 1.4 % — beneath the two % goal set by the Swiss Nationwide Financial institution.
The traditionally low unemployment price of two % since spring 2022 additional showcases the robustness of the Swiss labour market.
The energy of the Swiss franc in opposition to the euro and the greenback has additionally reached unprecedented ranges, reaching a brand new file on the finish of December.
Whereas this advantages shoppers and vacationers, making international consumption extra reasonably priced, it poses challenges for Swiss industries as a result of it makes exports dearer.
The scarcity of expert labour stays a priority, and the sturdy franc is impacting the competitiveness of Swiss merchandise within the world market.
Prof Lein additionally highlighted the potential challenges within the journey trade because of the costly Swiss franc and anticipates blended fortunes for various sectors in 2024.