Switzerland No Longer a Banking Nation After CS Crisis25 April 2023
After Credit Suisse crisis banking is no longer the most contributing to the Switzerland’s economy, according to prominent Swiss newspaper.
No Longer Banking Nation
Credit Suisse crisis which ended in quickly arranged, and backed by the Swiss National Bank, takeover by UBS has its consequences on Swiss economy. According to newspaper Blick, a prominent Swiss publication, this merger will further diminish the importance of the banking sector to the Swiss economy. As of now it has already shrunk to less than 5% of gross domestic product, whereas before the global financial crisis this figure was at 8%. This means a huge change in Swiss economic landscape. Recently there have been also voices that due to this crisis CHF reputation got hit and it won’t longer be considered a safe-haven currency. However many economists believe investors will still buy Swiss francs in times of trouble, aiding its exchange rate hitting high levels.
Other Industries More Important
According to Blick other industries contribute now more to the Swiss economy. “Growth is now taking place in other sectors,” Alexander Rathke, an economist from the KOF institute at ETH Zurich university, said in an interview with Blick. Overall importance of banking to the Swiss economy has been now overtaken by the chemical and pharmaceutical industry that contributes now for about 6.3% of GDP. Companies like Roche Holding AG, Novartis AG and Lonza Group AG are the most known in Swiss pharmaceutical industry. This industry grow around 5.9% per year, mainly thanks to revenues of these giants. Also Swiss luxury watches industry has been recently in good shape. It recorded the unprecedented boom in demand for its products in the past two years. Export of watches from Switzerland was worth around 24.8 billion francs in 2022. Meanwhile, Swiss insurance companies contributes about 4.1% to the Swiss GDP with their growth. Also lot of economic output is produced by commodities trading giants such as Vitol SA, Glencore Plc and Cargill Inc. They now account for about 8.5% of Switzerland’s GDP.
Banking Sector in Stagnation
When pharmaceuticals or chemistry sector is flourishing, the banking branch is in stagnation at best or even declining. Swiss banks created value of 36.4 billion Swiss francs (around $40.8 billion as per latest average exchange rate) in 2021, according to data from the State Secretariat for Economic Affairs.