Swiss rank among the world’s leading investors

New York attracts much of the Swiss cash that flows abroad Keystone Archive

Switzerland remains one of the world's leading foreign investors, exporting capital worth more than the country's gross domestic product (GDP) every year.

A new study shows Switzerland made net overseas investments of almost $180 billion (SFr227 billion) in 2002, putting it behind only Britain, Japan and France.

Measured as a percentage of its GDP, Switzerland’s foreign investments put it only behind Hong Kong as the world’s leading investor abroad.

The country’s importance as a net foreign investor has been underlined by a new report produced by economists at Credit Suisse, using figures provided by the Swiss National Bank and the United Nations.

In 2002, Switzerland invested $298 billion – or the equivalent of 111 per cent of its GDP abroad – putting it ahead of countries such as the United States and Germany.

Monika Engler, a Credit Suisse economist, told swissinfo that Switzerland’s high ranking was driven by cash-rich Swiss companies eager to expand.

“It’s a question of companies that want to grow, but see themselves restricted in Switzerland,” Engler said.

Because of Switzerland’s land-locked location, lack of natural resources and limited internal economy, big firms have little choice but to invest abroad, she said.

“Interestingly, the bulk of Swiss direct investments abroad go into industrialised countries and not, as so often is thought, to developing countries where wages are low,” Engler said.

Investing in money

Engler said Switzerland’s role as an exporter of capital had grown substantially during the 1990s, peaking towards the end of the decade thanks largely to a series of big investments by Swiss banks in the US banking industry.

The statistics also showed that 50 per cent of Swiss foreign investment has remained in Europe.

Some 25 per cent flowed to the US, while most of the rest went into to emerging and developing economies.

The lion’s share of Swiss money abroad was invested in either insurance (25 per cent), banking (13 per cent) or financing companies (25 per cent).

Only 14 per cent went to chemical industries, while machinery and metals attracted 5 per cent.

Foreign investments in Switzerland

Although Switzerland is a net exporter of capital, the country still attracted some $44 billion in foreign investments during 2002.

Engler said Switzerland was witnessing a surge of investments by foreign companies setting up their headquarters in Switzerland.

“Most foreign investments [into Switzerland] flow into holding companies or companies that build their headquarters here,” Engler said.

She said Switzerland’s low corporate tax rates, and a highly skilled workforce had been a trigger for much of that investment.

swissinfo

Key facts

“Net investments abroad” are measured by subtracting inflowing capital from capital going abroad.
In 2002, Switzerland invested $298 billion (SFr376 billion) abroad.
Net investment abroad was $179 billion.
In absolute terms Switzerland is ranked fourth, behind Britain (with $394 billion in foreign investments), Japan ($272 billion) and France ($251 billion).
The United States invested more than $1.3 trillion abroad in 2002.
However, some $1.35 trillion flowed back from foreign investors, putting its net foreign investments at $150 billion.