OECD gives Swiss economic policy good marks
Published: Thursday, Mar 14th 2024, 12:30
Updated At: Thursday, Mar 14th 2024, 12:30
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Switzerland's economy is well on track. This is confirmed by the Organization for Economic Cooperation and Development (OECD) in its country report. However, it recommends further opening up foreign policy and expanding trade relations in order to become more resilient.
In order to increase the resilience of the economy and productivity, the OECD also recommends in its new report that domestic competition be strengthened and the administrative burden on companies be reduced.
The organization advises against costly industrial policy initiatives such as state subsidies or protectionist measures, according to a statement from the State Secretariat for Economic Affairs (Seco) on the OECD report on Switzerland's economic policy published on Thursday.
According to Seco, the OECD's recommendations fit in well with the path Switzerland has chosen. The unilateral abolition of industrial tariffs at the beginning of this year was an important step towards reducing trade barriers. Another is the adoption of the negotiating mandate with the EU.
According to Seco, further important work to expand and consolidate trade relations is currently underway. This also includes the recently signed free trade agreement with India and the recently concluded modernization of the free trade agreement with Chile.
Recent crises well overcome
The OECD emphasizes that Switzerland has coped well with recent crises such as the coronavirus pandemic or the sharp rise in energy prices following the Russian invasion of Ukraine and that the economy has shown itself to be resilient.
The system of national economic supply, which is based on the responsibility of companies and only provides for state intervention on a supplementary basis and for essential goods, also receives praise. The OECD therefore recommends that Switzerland retains this system.
Unemployment and inflation are low in Switzerland and the standard of living is among the highest of the 38 OECD member countries. This is reinforced by a dynamic market economy, a highly qualified workforce and a prudent macroeconomic policy.
Competition at risk after bank merger
However, the OECD is concerned about the emergency takeover of Credit Suisse by UBS. Although this has ensured financial stability, it has also created new risks and challenges for the Swiss economy. This is because the largest bank merger since the financial crisis has created a group whose total assets are almost twice as large as the country's annual economic output (GDP).
The merger of the two largest Swiss banks also raises questions about competition, according to the OECD. The combined bank would account for around 25 percent of domestic deposits and loans. The OECD therefore recommends that the Swiss authorities continue their strict supervision and monitoring of the enlarged bank.
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