Switzerland punches above its weight on foreign investment

Paradeplatz in Zurich, home to many financial institutions © Keystone / Gaetan Bally

The amount of Swiss foreign direct investment (FDI) in neighbouring countries, and more generally in Europe, has been rising steadily for several years. A look at the latest figures.

This content was published on June 18, 2020 - 13:20

Swiss investment in France has never been so high, according to the 2019 Annual Report of Foreign Investment in France, published at the beginning of June.

Last year, 76 new investment decisions in France were announced by Swiss companies. This makes Switzerland the fifth-largest provider of projects in the country, creating or maintaining more than 2,200 jobs.

Although the Covid-19 pandemic has changed the economic outlook, more than two-thirds of the projects listed in France for 2019 have been completed, according to the annual report. However, some of the other investments could be “delayed or even [...] interrupted or suspended for good”.

How much do the Swiss invest abroad?

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In terms of FDI stocks – in other words, the total amount invested – Switzerland is the fourth-largest provider of investment in France. At the end of 2018, when the latest official statistics were available, the total amount of Swiss FDI in France exceeded €81 billion (CHF86.5 billion), according to the French national bank.

Switzerland’s weight is also evident in other countries with which it shares a border. At the end of 2018, Switzerland was the fourth-largest foreign investor in Germany (€89.5 billion invested), fifth in Austria (€11 billion) and sixth in Italy (€20 billion), according to figures provided by the respective national banks.

The value of the Swiss FDI stock has been growing steadily in all four countries for at least five years.

Does this reflect a general growth in investments outside Switzerland?

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Yes. At the end of 2018, total stocks of Swiss direct investment abroad amounted to CHF1.467 trillion, up 5% year-on-year and up almost 40% since 2013, according to figures from the Swiss National Bank (SNB).

The increase was most marked in Europe (70%), particularly in countries with numerous holding companies such as Cyprus, Ireland (400% in five years), the Netherlands (150%) and Luxembourg.

The United States, Luxembourg and the Netherlands have for several years been the three main host countries for Swiss direct investment. Together with Britain and Ireland, these countries accounted for more than two-thirds of all Swiss FDI in 2018.

What effect is the Covid-19 pandemic expected to have?

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Global flows of foreign direct investment will experience a “dramatic drop”, already in 2020 but also in 2021, due to the Covid-19 pandemic, the United Nations Conference on Trade and Development (UNCTAD) warned in a report published on Tuesday. The organisation expects a 40% drop from 2019 levels.

Announcements of new investment projects and cross-border mergers and acquisitions have already fallen by more than 50% in the first few months of 2020 compared with 2019. Among developed countries, FDI flows to Europe are expected to fall by 30-45%.

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