Switzerland: Focus on lifting productivity to guarantee future prosperity | WPN World People News

Switzerland’s recent economic performance has been impressive, but with growth now slowing new reforms will be necessary to maintain high levels of prosperity and ensure future well-being, according to the latest OECD Economic Survey of Switzerland.

The Survey, presented in Bern Tuesday by OECD Chief Economist Catherine L. Mann and Switzerland’s State Secretary for Economic Affairs Marie-Gabrielle Ineichen-Fleisch, shows that the Swiss economy has been among the most resilient worldwide in recent years. Low interest rates, high levels of immigration and an exchange rate ceiling that supported exports combined to help the country record strong and stable growth in the aftermath of the global economic crisis.

“Switzerland’s ability to bounce back from the crisis and out-perform most of its main trading partners was driven by sound economic policy,” Ms Mann said. “The challenge going forward will be allowing policy to evolve, taking into account the rapidly changing environment, including the appreciation of the Swiss franc and pending restrictions on immigration inflows. The main objective has to be raising productivity, which will remain the key to boosting growth and maintaining a high quality of life and well-being.”

The Survey suggests that Switzerland launch a new reform agenda to boost productivity, including renewed efforts to add flexibility to labour and product markets, improve public-sector efficiency, education and the business environment, and boost competition. Increasing competition in the telecoms and energy sectors, including the privatisation of Swisscom, will be critical.

Further efforts to promote more intensive participation of women in the work force, by increasing the supply of childcare facilities and introducing individual, as opposed to family taxation, should also be considered.

The Survey points out that Swiss real estate prices have grown rapidly, pushing the residential mortgage debt-to-GDP ratio to 120%, which is the highest level in the OECD. With domestic banks very exposed to the property sector, policies are needed to make supply more responsive and otherwise reduce risk from the sector.

Public expenditure in Switzerland was just 33.5% of GDP in 2014, which is one of the lowest levels in the OECD. But as the population ages, demands for public services will rise and revenues will be undermined, calling for improvements in public spending efficiency, according to the Survey.

Source: Organization for Economic Co-operation and Development