samedi 25 mars 2017

Switzerland, that little poor …and rich country!

 
A rough economic paradox!

         The economy of the Swiss Confederation lives a rough paradox. On the one hand, its health is striking: thanks to the competitiveness of its pharmaceutical industry, watchmaking, commodity trading and financial services, the Swiss National Bank's (B.N.S.) foreign exchange reserves are equivalent to The gross domestic product of Switzerland. Who says better ?
        
On the other hand, the Swiss franc is too strong and penalizes other sectors. The end of banking secrecy inexorably reduces the attractiveness of local banking institutions and forces them to squeeze their numbers and freeze wages. The announced growth rate for 2017 could reach 1.5%. As in 2016. It is not really the frank recovery that would erase the years of crisis and stagnation lived since 2009.

Immigrants and domestic consumption.

         In Switzerland, immigrants account for a quarter of the growth in consumption. Another threat: Switzerland does not have enough immigrants, which goes against the Swiss common sense. Credit Suisse Bank experts have developed five immigration scenarios, and in all cases labor force growth will be stalled in 2020 because immigrant arrivals are falling. These contribute to a quarter of the growth in consumption, and the growth of the country will be affected.

What about major international organizations?

         Add to these dark clouds the fact that the protectionism expected of the "America First" of Donald Trump and Theresa May's Brexit does not announce anything good for the world economy. Very hostile to multilateralism, does the U.S. president risk jeopardizing one of the pillars of globalization based in Geneva, the World Trade Organization (W.T.O.)?
        
Not to mention the United Nations, which has an office on the ground, and the plethora of international organizations which have flourished on the shores of Lake Geneva and which could suffer from the return of each nationalist for itself: International Labor Organization, World Health Organization, the International Telecommunication Union, etc..
        
The populist outbreaks of the National Front in France, of the A.f.D. in Germany or the Freedom Party in the Netherlands confirm the renewed identity reflexes on the Old Continent too, which does not bode well for a nation devoted to commercial and financial free trade.

Focus on Africa?

         What to do in the short term? Looking to lower the franc? The United States, which has already placed Switzerland on its list of countries suspected of manipulating their currency, could take retaliatory action at the instigation of their fiery president. Reforming corporate taxation, as requested by the international community? The Swiss have just said "no" by referendum. Back on the anti-migratory measures adopted in 2014? Random.
        
Perhaps salvation would consist in putting more vigorously on Africa. For a long time, this continent, far from international trade, in which it weighs only 3% or 4%, is returning to the world game, not only because of its raw materials. It offers tremendous opportunities both in terms of health, finance, tourism, trading, agri-food industries and business services, where Switzerland excels.

Poor little Switzerland, rich and anxious!

         While awaiting this new impetus, the Confederation is condemned to take the back burner. At the very most, it can be argued today that the Brexit will have limited effects ... In 2017, its franc will remain strong, its wages will hardly increase, its inflation rate will return positive and its exports will continue to prosper.
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*Article by Alain Faujas, specialist in global macroeconomics, published in Jeune Afrique on 23 March 2017.

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