Switzerland again no. 1 for competitiveness

Ranking comes in week with upbeat economic news

Patrick Odier

Patrick Odier, chairman, Swiss Bankers Association

GENEVA, SWITZERLAND – Switzerland has landed the top spot in the World Economic Forum’s world competitiveness report for the fifth year running, with the news coming during a week with several positive economic developments.

The top 10 out of 148 countries, in the WEF rankings:

Switzerland
Singapore
Finland
Germany
United States
Sweden
Hong Kong
Netherlands
Japan
United Kingdom.

In other economic news this week:

  • The federal LPP (“second pillar” in the Swiss public/private retirement system: pension funds) commission is recommending to the Federal Council that the minimum interest rate paid out in 2014 be increased from 1.5 to 1.75 percent, with financial markets showing improvements
  • The Swiss economy grew by 0.5 percent in the first half of the year, with GDP performing better than forecast, show figures released 3 September by Seco, the federal office of economic affairs. Private consumption drove the improvement, but a reassuring development is higher investments in machinery and equipment, a staple of the Swiss economy, for the first time in a year. The trade balance in goods shows imports down by 0.9 percent, with imports up 1.4 percent but this was balanced out by higher exports than imports for services.
  • Patrick Odier, chairman of the Swiss Bankers Association, made it clear at the group’s annual meeting 3 September that Swiss banks must now move in a new direction, with a US-Swiss agreement in hand, covering Swiss banks handling untaxed US assets. “We bear the sole responsibility in the coming years for acting in such a way that we live up to our responsibility to clients, staff, the economy, society and the next generation of bankers … Our strategy can be summed up in the words tax compliance, international standards, growth through open markets and fair competition.” Odier added that “a clear commitment to meeting international standards also implies an equally clear rejection of purely national solutions, as is currently envisaged in connection with tax-compliant foreign assets,” calling for the clean money strategy to be dropped.” He pointed to a difficult 2012 but noted that assets under management were up again. An SBA statement issued Monday notes: “at the end of 2012, banks in Switzerland managed CHF 5,565 billion of assets, a rise of CHF 320 billion on the previous year. The proportion of foreign assets remains unchanged at just over 50 percent of the total managed assets. This means that there was again no noticeable shift of foreign client money to other countries.”

The WEF explanation for Switzerland’s unchanged first place in world rankings:

“Switzerland retains its 1st place position again this year as a result of its continuing strong performance across the board. The country’s most notable strengths are related to innovation and labor market efficiency as well as the sophistication of its business sector (ranking 2nd in all three). Switzerland’s top-notch scientific research institutions, along with other factors, make the country a top innovator. Productivity is further enhanced by a business sector that offers excellent on-the-job-training opportunities, both citizens and private companies that are proactive at adapting the latest technologies, and labor markets that balance employee protection with business efficiency.

Moreover, public institutions in Switzerland are among the most effective and transparent in the world (5th). Governance structures ensure a level playing field, enhancing business confidence: these include an independent judiciary, a strong rule of law, and a highly accountable public sector. Competitiveness is also buttressed by excellent infrastructure (6th) and highly developed financial markets (11th). Finally, Switzerland’s macroeconomic environment is among the most stable in the world (11th) at a time when many neighboring economies continue to struggle in this area. While Switzerland demonstrates many competitive strengths, maintaining its innovative capacity will require boosting the university enrollment rate of 56.8 percent, and also increasing the participation rate of women in the economy (86 percent) which continue to trail many other high-innovation countries.”