Switzerland, located in western Europe, has a modernized market economy that boasts low unemployment, a high per capita gross domestic product (GDP), and a very skilled labor force.
More than half of Switzerland consists of mountains, forests, and lakes. The country does not have mineral resources, so it must import them. The biggest sector of the Swiss economy is "services." These services include insurance, tourism, and perhaps most famously, banking. Though farming is an important sector of the economy, Switzerland cannot produce enough for everyone, so the country must import agricultural products from other countries. The third major sector of the Swiss economy is industry, including textiles, watches, and machinery. The service sector accounts for around half the Swiss economy, industry for about 40%, and agriculture for the remaining 10%.
Foreign trade accounts for much of Switzerland's GDP, though the expensive Swiss Franc has a dampening effect on sales of Swiss exports. Some believe that Switzerland's not being a member of the European Union (EU) slows down their exports as well. In recent years, Swiss trading with EU countries has accounted for around 60% of goods shipped, and around 80% of the goods received.
Switzerland imports the most from the following countries each year: Germany, 41.2 billion Swiss francs; Italy, 13.8 billion Swiss francs; France, 13.7 billion Swiss francs; Netherlands, 6.4 billion Swiss francs; Austria and the U.S.A, 5.4 billion Swiss francs.
Switzerland exports the most to the following five countries: Germany, 27.7 billion Swiss francs; U.S.A. 13.8 billion Swiss francs; France, 11.5 billion Swiss francs; Italy, 11 billion Swiss francs; and the U.K., 6.2 billion Swiss francs.
Switzerland's top imports are chemicals, with 27.3 billion Swiss francs per year; machines, worth 25.9 billion; vehicles worth 12.8 billion; agriculture and fisheries worth 9.9 billion, and metals worth 9.3 billion, for a total of 85.2 billion Swiss francs worth of imports. The country's top exports are chemicals, with 44.4 billion Swiss francs; machines worth 31.7 Swiss francs; precision instruments, 22.6 billion, agriculture and fisheries 4.2 billion; and vehicles, 3.7 billion for a total of 106.6 billion Swiss francs worth of exports.
The currency, referred to in English as Swiss francs is called "Schweizerfranken" by the Swiss. One Swiss franc is comprised of 100 "Rappen." Coinage starts with 5 Rappen, or a Funfer; 10 Rappen, which is a Zehner; 20 Rappen, a Zwanziger; 1/2 Franken, a Funfziger; and 1 Franken, also called a Frankler. The two largest denomination coins in Switzerland are the 2 Franken Zweifrankler, and the 5 Franken Funfliber.
Paper money begins with 10 Franken, and goes up to 20 Franken, 50 Franken, 100 Franken, 200 Franken, and 1,000 Franken.
A "typical" Swiss family, which is a very generalized concept, spends its income approximately in the following ways: 30% for rent or house; 15% for insurance, health care, and savings; 20% for food both at home and out; 25% for other expenses, and 10% on taxes. The history of the modern Swiss economy from the mid 19th century on shows a country that made outstanding products, but that several times had to cope with major energy shortages, from war and the Arab oil embargos of the 1970s and 80s.
During the second half of the 19th century, Switzerland's agricultural sector decreased in size as the industrial sector grew, and by the dawn of the 20th century, Switzerland had a very large and prosperous economy, making Switzerland the wealthiest country in Europe. However, during the years of World War I, Switzerland faced an economic crisis due to decreased consumption of coal. A war tax was passed, and imports were hard to come by. Switzerland made attempts to strengthen its economy internally, encouraging grain growing, and switching the country's rail system from coal-burning steam-powered engines to electric rails.
When World War II began, Switzerland's economy profited from the export and delivery of weapons to Germany, but Switzerland's own energy consumption dropped precipitously. The banks' cooperation with Nazis, and commercial relations with axis countries drew sharp criticism from the outside, making Switzerland an internationally isolated country for a while. However, after World War II ended, Switzerland's factories remained fairly unscathed, causing a quick economic recovery.
In the 1950s, Switzerland's economic growth continued apace, with annual GDP growth averaging 5%. Though coal fell out of favor as a primary energy source, crude oil, refined oil, and natural gas increased their profiles as energy sources. The 1950s also saw the transition from an industrial to a service economy. For the past half-century the service sector has grown faster than the industrial and agrarian sectors.
Switzerland's economy didn't slow down much in the 1960s, with average annual GDP growth at 4% and a doubling of energy consumption. The 1970s, however, made up for a lot of that growth. After a peak of 6.5% GDP growth in 1970, by 1975 the economy was contracting at a rate of 7.5%. Its dependence on the OPEC oil cartel caused a large decrease in Switzerland's energy consumption during the mid 1970s. There were even a few "car free Sundays" when private cars were prohibited due to the effects of the oil embargo.
But things turned around in the late 70s, until the recession of 1982. After that, the economy grew again, though more slowly than before. After a recession from 1991 to 1993, Switzerland's annual GDP remained flat. But by the end of the century, Switzerland was once again growing economically, and by 2008 had the second highest GDP per capita in all Europe, trailing only Norway.