Beruflich Dokumente
Kultur Dokumente
MATERIAL
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1. Real GDP and GDP per capita of Switzerland
As we know that GDP means all of the final goods and services
produced in a country in a given period. But, if we want to know about the
economic growth of a country, we should know the GDP per capita of its
country, not just the GDP only.
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ECONOMIC GROWTH OF SWITZERLAND
GDP OF SWITZERLAND
2005
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the situation in the labor market relaxed slightly. For the first time in four
years, unemployment decreased across the entire euro area.1
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2006
In the first quarter, exports to the European Union grew up, with
the main accent on equipment goods, thereby supporting manufacturing.
This strength was maintained in the second quarter, which was being
Germany as the main trading partner. Besides exports, imports of goods
also played an important role to awakening the economic of Switzerland
in this year. Alongside the healthy business activity recorded in
manufacturing, equipment investment also grew strongly in the first half
of the year. This development was supported by favorable conditions,
including low interest rates and an auspicious growth outlook.
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An increasing demand in the labor market was happen in this year
too. This increasing demand of labor in the market make increased in
salary. It means that the income of the peoples was rising too, by looking
for the GDP per capita that increased to 35783 in this year. The
consumption also rose by the increased in income per capita of the
peoples. In the first of three quarters, the real wage of Switzerland rose by
2%.
At the end of 2006, growth prospects for the next year remained
good. At its press conference on 14 December 2006, the Switzerland
National Bank forecast GDP growth of about 2% for 2007. Although the
Swiss National Bank expected the expansion in exports to slow gradually
in line with the economies of our main trading partners, both equipment
investment and employment were likely to grow substantially. By
contrast, a restrained growth path was forecast for investment in
construction and continued strong growth in consumption, which was
likely to support economic growth. 2
2007
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whereas the importing decreased, due to increasing demand for
investment goods and consumer goods in Europe and South Asia.
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would stimulate the labor market and decline the number of
unemployment. Consequently, the Switzerland National Bank continued to
forecast GDP growth of about 2% for 2007.
2008
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The Switzerland wage index fails to take account of changes in the
composition of employment, mobility between sectors or bonus
payments. This shortcoming can be avoided by using the figures on salary
payments derived from the national accounts, which make it possible to
better evaluate movements in salaries. In 2008, these figures increased in
real terms by an estimated 3.6%. If one takes into account the 2.8%
growth in employment, real salaries rose by 0.8%. This increase is
attributable, on the one hand, to the recruitment of highly qualified staff
and, on the other, to the excellent state of the labor market up until the
first quarter, which allowed many employees to switch jobs and thereby
obtain better-paid positions.4
At the end of 2008, the global economy fell into deep recession
after having grown by 3% in the previous year. The main cause of the
economic crisis was the severe disruption of the global financial system
following the collapse of the US investment bank, Lehman Brothers in
September 2008. This led to a drastic reduction in inventories and
cutbacks in private consumption, particularity in the field of consumer
durables. Manufacturing and world trade were particularity heavily
affected by the decline in demand, with the latter additionally hampered
by the difficulties in export financing.
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2009
In the second quarter of 2009, Swiss good exports were 18% below
the level in period one year earlier. Comparing in a year to year before,
this is the sharpest decline ever recorded. Exports of services also fell
sharply, in particular due to the fall in receipts from commodity trading
and banking services.
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In the third quarter, GDP began to rise again. The revival of global
demand led to a recovery in Swiss exports. Fiscal stimulus program
introduced by other countries, in particular, aided exports of goods. As
regards exports of services, income from bank commissions increased for
the first time since early 2007 due to rising assets prices. 6
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2. CPI and Unemployment Rate
The SNB equates price stability with a rise in the national consumer
price index (CPI) of less than 2% . Because of that, it takes into
consideration the fact that not every price increase is necessarily
inflationary, and that inflation cannot be measured accurately.
Measurement problems arise, for example, when the quality of goods and
services improves. Such changes are not fully taken into account in the
1 www.wikipedia.com/consumerpriceindex
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CPI calculation; as a result, measured inflation tends to be slightly
overstated.3
3 Samuelson, Paul A. dan William Nordhaus. (2005). Economics: Eighteenth Edition. New York: McGraw-Hill.
4 Global-View.com/Forex DATABASE
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Inflationary pressures increase in phases of economic overheating
and decrease when production capacity is not fully utilised. Because of it,
the National Bank must restore price stability by tightening monetary
policy in the first case and easing it in the latter. Consequently, monetary
policy that is has relation to price stability has a smoothing effect on
aggregate demand.
The SNB does not react mechanically to its inflation forecast. It also
takes account of the general economic situation in its monetary policy
decisions. If inflation temporarily exceeds the 2% ceiling as a result of
one-off factors, such as a sudden surge in oil prices or strong exchange
rate fluctuations, monetary policy does not necessarily need to be
adjusted.
5 www.trandingeconomics.com/cpiswiss
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Period inflation
Swiss ever get the deflation during 2008 until 2009 because it
6 www.trandingeconomics.com/inflationrate
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has been a global economic resession. Because the CPI (willingness of
consumer to buy a product in certain price of a period) is decrease, the
deflation happened and the money value of swiss has decreased too.
And the lowest point of this deflation is July 2009 in -1.2 point. But, in
the 2010 the CPI of swiss back to normal again and the inflation
happened
7 www.google.com/annualreportofswitzeland
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because the slowdown in economic activity helped to curb inflation.8
8 Ibid.
9 www.google.com/labormarktetofswiss
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companies to the world market.
10 www.google.com/unemploymentrateofswiss
11 www.swissnatinonalbank.com
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protecting the confidentiality of its banking and financial services center
of a regular and advanced.
Two of its biggest banks, namely UBS and Credit Suisse, controls
two-thirds of the Swiss banking sector. Banking absorb about 3% of the
total Swiss workforce.
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12 www.tradingeconomics.com
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be derived from exports and from equipment investment.
2004 2005
2006 2007 2008 2009
13 www.google.com/annualreportofswitzerland
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from one sector to another.
Question :
1. When The CPI of swiss increase, what is the sector which have a big
contribution in increasing CPI itself? And what does the government do
when the inflation happened?
Answer :
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3. Investment, Government Budget, Interest Rate and
Saving
3.1 Investment
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Swiss gross investment was 23.23 percent of GDP and net
investment was 11 percent of GDP in 2000. In 2001 business investment
fell to 23.06 because of global economy slowdown.
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actual production change in an economy is only decided by changes in
the labor force, the state of technology, and productivity of the workforce.
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discussion on the links between competitiveness, openness, and
exchange rate developments. They observed that Switzerland's surplus
has risen further owing to substantial earnings on foreign investments.
Directors noted that the opening up of sheltered sectors could improve
productivity and raise investment, allowing over time for a reduction of
the current account surplus and for continued moderate real appreciation
of the Swiss franc.
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The fiscal stance was neutral in 2008. The general government
recorded a surplus of about 1 percent, as continued surpluses at lower
levels of government offset a small federal deficit
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Amidst evidence in early 2000 that the economy was growing at an
unsustainable rate, monetary policy was adjusted promptly to head off inflation
pressures. The Swiss National Bank (SNB) raised the mid-point of its key
operational interest rate target from 1 percent in September 1999 to 3½ percent
in June 2000.
With inflation very low and economic activity weak, the Swiss
National Bank (SNB) has relaxed monetary conditions considerably,
keeping short-term interest rates close to zero in 2004 and allowing a
rapid expansion of monetary aggregates.
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The SNB continued to normalize interest rates in 2006 and early
2007. With five quarterly step increases of 25 basis points, the policy rate
now stands at 2¼ percent or about 1¾ percent in real terms, slightly
above average for past cycles.
3.4 Saving
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decreased to 27.83, influenced by the a sharp downward of interest rate.
The decrease still continued in 2003, in response to low interest rate.
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saving. We can see that in 2003-2005 government was projected deficit
to stimulating or slowing economic growth, so there’s no contribution
from government saving in that year.
4. Financial System
4.1 Banking in Switzerland
Moreover banking technology had been applied to pursue all kinds of banking
activities. In last period, people of Switzerland used post office services to secure banking
activities but by technology increasing and modernization era, Swiss Banking is holding
Swiss Interbank Clearing (SIC) which is monitored by Swiss National Bank (SNB) as the
central Bank of Switzerland.
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Furthermore there will be explanation about the definition, function and system of
central bank in case creating stability condition of Switzerland and information of banks
which has existed in Switzerland included the major banks which also have great roles in
supporting financial and banking condition of country.
Swiss National Bank (SNB) is the central bank of Switzerland which has
been built since January 16th, 1906 and has been operated since June 20th, 1907.
The Principle Tasks of National Bank such as regulating the country’s monetary
circulation, facilitating payment transactions, and pursuing a monetary policy
serving the interest of country as a whole. Unlike most foreign central banks,
Swiss National Bank is not state-owned bank14 which has status as an independent
public-law institution in form of joint stock company and all SNB’s shares are
registered and listed on stock exchange. However Shareholders’ voting right are
restricted by statute to Swiss citizens, Swiss public-law corporations and legal
entities whose main establishment is in Switzerland and just under 60% of shares
are held by cantons and cantonal banks, the remainder are mostly owned by
private persons but confederation does not hold any shares15.
14 Structure and organization of the Swiss National Bank, Annual report of SNB
15 Structure and organization of the Swiss National Bank, Annual report of SNB
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issue banknotes and put the coins minted by confederation into circulation or
responsibility of cash division. The monetary operation of department III has
division of implementing monetary policy by carrying out transaction in financial
market.
Talking about the volume of banknotes and coins put into circulation, it will
depend on the requirements of the economy and on payment habits. In another
sides, Swiss National Bank cooperates in planning and processing of cashless
payment transactions.
Since 2006, there had been more than 408 banks and securities dealers
which authorized in Switzerland. This fact could give the information how stable
banking situation in Switzerland.
In Switzerland, there are two major banks as the first and the second
largest. They are Union Bank of Switzerland (UBS) and Credit Suisse which have
account for over 50% of all deposits in Switzerland and have extensive branch
networks throughout the countries and most international centre countries. Swiss
National Bank itself reported that due of those reasons, UBS and Credit Suisse
are being subject to an extra degree supervision from the federal banking
commission.
UBS was found in 1862 but started to exist in June 1998 after merging
with Swiss Bank Corporation which was found in 1872. Until now, UBS
maintains seven main offices around the world, four branches in USA and
another ones are in London, Tokyo and Hongkong.
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This Union Bank of Switzerland authorization had given significant
number of profit for the country and help to decrease unemployment. Based
on information browsed from annual report of Swiss National Bank of year
2008, UBS had market capitalization for over CHF43 billion with net loss for
over CHF27.56 billion. This bank also could hire for 77,7783 employees.
b. Credit Suisse
This bank was found in 1856 which acquired as The First Boston
Corporation in 1988. Similar with UBS, in 1997 Credit Suisse merged with
Winterthur insurance company in 1997. Its operational is concluded the
offering private banking, investment banking, and asset management
services, though in 2008 the asset of management services were sold to
Aberdeen Asset Management during the GFC.. The same sources based in
year 2008, this bank had market capital for $95.2 billion and its employees
had reached for number of 40000 employees.
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Source : www.currencyworld.biz
Since year 1907, Swiss National bank has taken the right and role of
banknotes and coin minted from banks and some cantonal officers. Until now this
policy and another things related to the circulation of official monetary is holding
by Swiss National Bank, as the central bank of Switzerland.
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a. Price Stability
c. LIBOR
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All kinds monetary policy managed and set by government and its central
bank of country give significant impact into the progress of fluctuation of
economic growth especially monetary condition. These cases also happened in
Switzerland economic. Some of cases related to what monetary policy set are
inflation rate and interest rate which are observed in next explanation.
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tragedies related to social and politic which influenced the economic
condition and give impact to its inflation rate. The graph below can show
the information of inflation rate of Switzerland in 2000 to 2004 and its
relationship to its interest rate.
Interest Rate
Interest Rate
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growth which around 0.4% to 1.6% but last decreased into 0.5% point as
one of impact of WTC Attack on September 2001. The bad economic in
US influenced economic activities in another countries included
Switzerland. In this time, central Bank of Swiss took the policy to set the
interest higher as the earliest period but then decreased as tragedy
happened because the banking condition was not stable to set interest rate
high, though it returned be stable as last decade of year.
The WTC impact in last period of year 2001 were still continuing
in first quarter of year 2002. It can be shown by the clear fluctuation of
inflation rate as its rising to 1.1% but then fell into 0.1% and started
increasing to point 1.2% in short time period. However it succeed to reach
about 1% point in final of year.
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• Inflation Rate and Interest Rate on year 2005 until 2009
Interest Rate
Interest Rate
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However the small fluctuation were caused by the movement of
crude oil price level. However year 2006 is not so different from 2005,
the 2% of annually inflation rate was accomplished in this year. The
fluctuation just moved around 1.5% and finally reached 0.5% point while
interest rate was along 2.5%.
Extreme point of inflation in year 2007 did not stop while entering
the year 2008 even stepping into higher position and reached posint 3% of
inflation. Actually it is the effect and reason of global economic crisis
which occurred in United States and then influenced another economic
activities included in several countries. Furthermore to solve this crisis,
government of Switzerland and its Central Bank set the interest in high
rate to control monetary aggregate besides reducing consumption so that
it started to be decreased gradually in middle term into last term of year in
position 0.5% point.
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In conclusion, Swiss investment is stable. It was decrease in 2002-2003
in response to 9/11 incident, increase in 2004-2007 because of monetary
and fiscal policies and because of economy got stronger, but it was decrease
again in 2008 because of global economy crisis.
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Sometimes budget in Swiss is arranged to experience a deficit like in
2003 which was projected to deficit of 0.81 percent of GDP.