Switzerland

C

Forestry and Fishing

About 31 percent of Switzerland is forested. For centuries timber was one of Switzerland’s most important sources of raw material and fuel. Today, Swiss forests are carefully managed to prevent any net loss of woodlands, which are vital to preserving Switzerland’s water quality, wildlife, and scenic beauty, as well as to help protect against landslides and avalanches. Reforestation of cleared areas is required under Swiss law. Most timber is harvested in small, selective cuttings. Production of timber in Switzerland was 5 million cu m (178 million cu ft) in 2005.

Fishing is a minor industry in Switzerland, with catches of fish such as salmon and trout totaling about 2,807 metric tons in 2004. Most fishing takes place on Lakes Geneva and Neuchâtel and Bodensee and their tributary rivers.

D

Mining

The Swiss mining industry is not of major importance. Mineral production mainly involves rock salt and cement.

E

Manufacturing

Although raw materials are scarce in Switzerland, the country has a well-developed manufacturing sector. Switzerland’s skilled workers convert imported raw materials into high-value exports.

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Historically, manufacturing in Switzerland stems from the country’s abundant sources of waterpower. For centuries the physical energy of falling water turned water wheels that powered mills and machinery of all sorts, especially those involved in textile manufacturing. Textiles, in turn, created demand for dyes, which stimulated development of a chemical industry. The country’s engineering, machinery, electrical, and metal industries also can trace their origins in part to the age of water wheels. Because potential waterpower exists throughout the country, Switzerland never developed a manufacturing belt or industrial heartland. Instead, industrial production is geographically dispersed.

Today, heavy engineering and machine building, especially the manufacture of top-quality custom-built equipment, accounts for a significant portion of Swiss exports. Switzerland is the largest producer of textile machinery in the world, and one of the world’s top manufacturers of weighing and printing machines. Switzerland remains a world leader in the production of dyestuffs, and the Swiss pharmaceutical industry ranks among the top producers of specialized drugs.

Also important to the economy are smaller products of precision engineering, especially watches, chronometers, and clocks—an industry that dates to the 16th century in Switzerland. Most important developments in watchmaking since that time have come from Switzerland, whose manufacturers have earned world renown for their expertise, workmanship, and inventiveness. Switzerland has been the world’s dominant producer of watches and chronometers since the 19th century. The contemporary Swiss watch industry is concentrated in cities and towns throughout the Jura region. Hundreds of Swiss firms annually produce some 1.5 billion watches, movements, basic parts, and other watchmaking products—95 percent of which are exported. Famous for its exquisitely engineered luxury timepieces, Switzerland is also known for making the world’s bestselling plastic watch, the Swatch.

Not all products manufactured for export have their origins in modern factories and workshops. Switzerland also has a long tradition of producing high-quality handicrafts. Most important among these are music boxes, embroideries, laces, and carved wooden objects.

F

Services

F

1

Currency and Banking

The unit of currency is the Swiss franc, divided into 100 centimes (1.20 francs equal U.S.$1; 2005 average). The semiprivate Swiss National Bank, the nation’s central bank, is the bank of issue. Shares in the bank are held by the cantons, other banks, and the public.

Switzerland is a major international financial center, and private banking is one of the country’s principal employers and sources of income. Leading commercial banks are the Union Bank of Switzerland (UBS AG) and the Credit Suisse (Swiss Credit Bank). The Zürich Stock Exchange is one of the most important in Europe, and the city is also a major trade center for gold.

International depositors and financiers have long favored Swiss banks because of Switzerland’s political and monetary stability, experience in financial matters, and banking secrecy laws. The Swiss banking industry rose to international prominence after World War I (1914-1918), when inflation eroded the currencies of many war-damaged European countries. A neutral nation, Switzerland emerged from the war with a strong economy and stable currency. Foreign money deposited in Swiss banks, and accounted for in Swiss francs, stood little chance of being lost to inflation. The advent of the banking secrecy laws largely coincided with the rise of German dictator Adolf Hitler in the years preceding World War II (1939-1945). Fearful of Hitler’s intentions, many Europeans—especially Jewish people—began transferring personal and commercial assets to Swiss banks. Hitler, angered that assets in Germany had been sent abroad, dispatched agents to Switzerland to investigate. In response, Swiss authorities enacted secrecy laws shielding the accounts from scrutiny.

In recent decades Switzerland’s banking secrecy laws have drawn criticism. A frequent complaint is that such secrecy has helped criminals to hide their ill-gotten gains. In the mid-1990s, in response to domestic and international pressure, Switzerland agreed to relax banking secrecy laws when accounts are the subject of criminal investigations. During the same period, a growing controversy emerged over funds in unclaimed accounts of victims of the Nazi Holocaust. In 1995 the Swiss Banking Association (SBA), under pressure from leading Jewish organizations, consented to search its vaults for such accounts. A survey of the largest Swiss banks revealed $34 million in dormant accounts opened before 1945. Jewish groups disputed the findings, claiming the search should have turned up billions of dollars in lost assets. Subsequent investigations confirmed the existence of thousands of additional accounts. In 1998 Swiss banks agreed to a global settlement of all claims and suits against them. This led to the creation of a $1.25 billion fund to compensate Holocaust victims and their descendants. Not everyone considers the matter closed, however, and investigations and legal maneuverings continue.

F

2

Foreign Trade

Switzerland is highly dependent on foreign trade, both for imports and exports. Swiss trade policy is marked by a strong preference for free trade, low import duties, and few import quotas, apart from limited quotas applied to some agricultural goods. The vast majority of Switzerland’s foreign trade is with its industrialized neighbors in western Europe, in addition to the United States, Japan, and China. In 2000 Switzerland’s chief trading partners for exports were, in order of importance, Germany, the United States, France, Italy, the United Kingdom, Japan, and China. Leading partners for imports were Germany, France, Italy, the United States, and the United Kingdom.

Switzerland generally earns less from exports than it spends on imports. Despite this deficit in foreign trade, Switzerland maintains a positive balance of international payments because of the large income it receives from other sources, mainly payments for services. These include international banking, insurance, and tourism.

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