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OECD
ECONOMIC
SURVEYS
SWITZERLAND
APRIL 1978
BASIC STATISTICS OF SWITZERLAND
THE LAND
Area (1 000 sq. km.)
Cultivated land, grassland and pastures
(1 000 sq. Jem., in 1972)
Forest (1 000 sq. km., in 1972)
41.3
Major cities, 1976 estimates
(1 000 inhabitants):
20.2
Zurich
387.9
10.3
Basle
191.5
Geneva
155.4
Bern
148.6
THE PEOPLE
Population, 1976 average, estimates
(1 000)
6 346
No. of persons per sq. km.
154
Net annual rate of population increase
(per 1 000 inhabitants,
average 1972-1976)
1.4
Labour force, 1976 (1 000)
2 816
Percentage distribution:
Agriculture
8.6
Industry and construction
43.2
Other activities
Number of foreign workers subject
to control (1 000):
August 1977
Annual average increase in the
number of foreign workers subject
320.4
to contro', August census (1 000):
1956-1964
50.0
1965-1977
48.2
PRODUCTION
Gross National Product in
1976
(billion Swiss francs)
Growth of real GNP, 1971-1976
average (annual rate, per cent)
Gross fixed investment in
145.9
0.3
1976
(in per cent of GNP)
Growth of real fixed investment, 19711976 average (annual rate, per cent)
Value added by industrial origin
in 1970 (in per cent of GDP
at factor cost):
Agriculture
Industry
4.5
39.5
Construction
20.0
9.0
Other
47.0
4.4
THE GOVERNMENT1
Public consumption in 1976
(in per cent of GNP)
Revenue
in
13.1
Composition of Parliament
(per cent):
National
1976
(in per cent of GNP)
Public debt in per cent of current
receipts (1976)'
State
Council
Council
23.0
38.6
23.5
34.1
27.5
11.4
10.5
11.4
15.5
4.5
26.1
Christian
96.6
Radical
Democrats
Democrats
Socialists
Central
Democratic
Union
Other
Last
elections:
1975
Next elections:
1979
FOREIGN TRADE
Imports of goods and services including
Exports of goods and services including
factor incomes,
factor incomes, as a percentage
as a percentage
of GNP (average 1972-1976)
Commodity exports
(fob, million US dollars, 1976)
Percentage distribution (1976):
36.6
of GNP (average 1972-1976)
32.7
Commodity imports
14 846
(cif, million US dollars, 1976)
Percentage distribution (1976):
To OECD countries
72.0
From OECD countries
To developing countries
Food, drinks and tobacco
(S1TC sections 0 and 1)
Materials (2, 3, 4)
Semi-finished goods and chemicals
21.3
From developing countries
(5 and 6)
Finished manufactured goods
(7, 8, 9)
40.7
Food,
3.8
1.9
53.6
14 773
86.4
9.8
drinks and tobacco
(SITC sections 0 and 1)
Materials (2, 3, 4)
Semi-finished goods and chemicals
(5 and 6)
Finished manufactured goods
(7, 8, 9)
11.4
15.8
32.9
39.9
THE CURRENCY
Monetary unit:
Swiss franc
Currency units per US $,
average of daily figures:
Year
1977
March
1
Confederation, Cantons and Communes.
2
Consolidated debt of the Confederation.
NOTE
1978
2.4036
1.8990
An international comparison of certain basic statistics is given in an annex table.
OECD ECONOMIC SURVEYS
, .', ,- I, i V
i;
i K r '<' K >' UO'V.
zz ::;.' :'.:-:r [T.Êrë
U 01P
SWITZERLAND
ORGANISATION FOR BCONOMIC CO-OPERATION AND DEVELOPMENT
The Organisation for Economic Co-operation and Development
(OECD) was set up under a Convention signed in Paris on 14th
December 1960, which provides that the OECD shall promote policies
designed :
to achieve the highest sustainable economic growth and employ¬
ment and a rising standard of living in Member countries, while
maintaining financial stability, and thus to contribute to the deve¬
lopment of the world economy;
to contribute to sound economic expansion in Member as well as
non- member countries in the process of economic development;
to contribute to the expansion of world trade on a multilateral,
non- discriminatory
basis
in
accordance
with
international
obligations.
The Members of OECD are Australia, Austria, Belgium, Canada,
Denmark, Finland, France, the Federal Republic of Germany, Greece,
Iceland, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zea¬
land, Norway, Portugal, Spain. Sweden, Switzerland, Turkey, the United
Kingdom and the United States.
The Socialist Federal Republic of Yugoslavia is associated in certain
work of the OECD, particularly that of the Economic and Development
Review Committee.
The annual review of Switzerland
by the OECD Economic and Development Review Committee
took place on 22nd March 1978.
©OECD, 1978
Queries concerning permissions or translation rights should be addressed
to:
Director of Information, OECD
2, rue André-Pascal, 75775 PARIS CEDEX
16, France.
CONTENTS
Introduction
I
Domestic performance
5
Firmer trend in demand and output
Employment and labour market
Stability of prices and costs
II
III
IV
V
7
13
15
External relations
20
Persistence of a very large current surplus
Capital movements and exchange rate
20
25
Certain structural aspects
32
Shift in demographic trends
33
Increased dependence on abroad
Restructuring and rationalisation of activities
34
36
Stance of economic policy
38
Monetary policy
Fiscal policy
Other economic policy measures
38
44
48
Short-term outlook and economic policy issues
49
Forecasts for 1978
49
Economic policy issues
52
Statistical Annex
57
TABLES
Text
1
2
3
4
5
6
International comparisons
Demand and output
Indicators of households' consumption expenditure
Indicators of investment in machinery and equipment
Indicators of construction activity
Population, employment, labour market
6
8
10
10
11
14
7
Prices
17
8
9
10
11
Wage earnings
Exports by geographical market
Foreign trade by commodity groups
Balance of payments
19
21
22
24
12
Structure of current invisibles
25
OECD Economic Surveys
13
14
15
16
17
18
19
20
International comparison of current balance
Medium term trend in resident population
Degree of external dependence of Switzerland
Financial support granted by the Swiss National Bank
Monetary variables
Budgets of central government and local authorities
Central government budget, economic classification
Prospects for 1978
27
33
35
39
40
47
48
50
Statistical annex
A
B
C
National product and expenditure at current prices
National product and expenditure at 1970 prices
Wholesale prices
D
E
F
G
Interest
Foreign
Foreign
Balance
rates and capital markets
trade by area
trade by commodity groups
of payments
57
58
59
60
61
62
63
DIAGRAMS
1
2
3
4
5
6
Selected indicators of economic activity
Trend of prices
Structure of the balance of payments
12
16
26
Change in the current balance and in the relative level of activity
Short-term trend in the Swiss franc exchange rate
Medium-term trend in the Swiss franc exchange rate
28
30
31
7
Interest rates
42
8
Monetary variables
43
INTRODUCTION
The upswing in activity which became apparent in 1976 gathered appreciable
momentum last year, and the Swiss economy gradually pulled out of the recession
it had entered in 1974.
However, notably because of a contraction of the eco¬
nomy's productive capacity, real national product in 1977 was still below its
pre-recession level.
Exports of goods and services had a preponderant multiplier
effect on the economy, but domestic demand also revived as the result of a firmer
trend in private consumption that was partly due to a fall in the savings ratio and
a slight pick-up in investment after three consecutive years of very steep decline.
Following a decrease of around 12 per cent between 1973 and 1976, employment
stabilised in the course of the year.
This caused a fall in unemployment,
although the rate had never gone above 1 per cent of the labour force during the
recession, and a marked slowdown in departures of foreign workers.
The rise in
prices and wages was remarkably moderate for the second year running and, in
January 1978, the consumer price index was only 1 per cent above its level of a
year earlier.
The external current surplus was again considerable, equivalent to
5.5 per cent of GNP.
After falling slightly between mid-1976 and mid-1977, the
Swiss franc's effective exchange rate appreciated substantially.
While aiming to ensure the right conditions for consolidating the recovery,
economic policy was slightly less expansionary on the whole than in the previous
two years.
During the period of relative stability of the exchange rate, the author¬
ities' monetary policy encouraged faster growth of bank credit and a continued
easing of interest rates, which helped production to recover.
Since the emergence
of strong pressures on the exchange market, and especially since the beginning
of 1978, a set of exceptional measures have been taken to stem the inflow of
capital funds.
Unlike what had occurred in the two previous years, notably in
the context of the activity-support programmes, fiscal policy did not have a
stimulative influence in 1977.
The growth forecasts for 1978 are relatively
guarded.
The outlook for world trade and the currency's recent appreciation
are likely to inhibit export growth, while on the domestic front, fiscal policy
as currently defined is only slightly expansionary.
This survey is in five parts which deal successively with domestic performance,
external transactions, certain salient features of the structural changes in the Swiss
economy over the last few years, the stance of economic policy, and, finally, the
short-term prospects and economic policy issues.
I
DOMESTIC PERFORMANCE
The phase of adjustment which the Swiss economy entered in 1974 brought
on a severe recession which reached its trough in 1975 and early 1976.
The
combination of falling world demand and a vigorous counter-inflationary policy
very largely account for the depth of the recession, the most notable effects of
Table 1
Internationa] comparisons
Percentage change over four years: 1973 to 1977
Austria
GDP/GNP, volume
Hi
Belgium
Denmark
71
Finland
Norway
Netherlands
Sweden
41
19*
10}
2
261
101
8}
5i
15}
71
21
19
81
Switzerland
-44
of which:
Final domestic demand
Exports of goods and services
Industrial production
Employment
Change in unemployment rate'
Consumer prices
Current balance as percentage of GDP (1977)3
Effective exchange rate3
7i
10
16
14
44
5
-11
5
J
34.5
-51
16.0
1
2
Differences between the annual average unemployment rate in 1977 and in 1973.
Balance in 1977 compared with GDP in 1977.
3
December 1977 on December 1973.
4
Including Luxembourg.
21
14
-1
i
-1
-8}
144
-6
-31
4
0
51
61
61
33
0
3
-4
0
48.5
53.0
77.7
45.5
40.2
48.3
20.7
IV
10.7
-31
2.3
Sources: OECD, Main Economic Indicators; OECD, Economic Outlook, December 1977; Secretariat estimates.
-i
-9.0
-141
6.9
-12
11
-41
51
10.9
-8.3
50.3
!
s
a
o
3
c
3
Switzerland
which were the emergence of considerable spare capacity and a very marked fall
in employment.
In spite of certain measures taken to support activity and employ¬
ment, domestic demand, given the contraction of total production capacity linked
with the decline in the labour force, fell by more than 1 1 per cent in real terms
between 1973 and 1976.
The fall in national product was limited to 7.3 per cent,
however, owing to a very pronounced expansionary impact produced by the
balance of external transactions.
The current payments surplus widened consid¬
erably, and since 1975, it has represented more than 5 per cent of GNP. At the
same time, there was a substantial appreciation of the effective exchange rate.
Remarkable results were achieved on the inflation front, and these were both one
of the causes and one of the consequences of the currency's appreciation.
The
rate of increase in consumer prices was reduced from nearly 1 0 per cent in 1 974
to 1.7 per cent in 1976 and 1.3 per cent in 1977.
The comparisons that can
be drawn between the overall economic trend during the last four years in Switzer¬
land and in other Member countries of roughly similar size and economic
structure clearly reveal a number of particular features of the Swiss economy's
adjustment.
Firmer trend in demand and output
According to estimates which are still provisional, real GNP grew by 4.3 per
cent in 1977, a much stronger advance than generally expected and one which
puts Switzerland among the Member countries with a relatively high growth rate.
The projections made at the beginning of the year by the Federal Administration's
economic forecasting group and by the OECD Secretariat foresaw a volume growth
of under 1 per cent.
The main explanation1 for this under estimate was that
merchandise exports by volume increased by nearly twice as much as expected
(1 1.8 per cent instead of 6 per cent).
Partly because of this development, private
demand also made more headway than initially foreseen.
Private consumption
picked up significantly and fixed investment began to recover from its fall of
26 per cent between 1973 and 1976. In all, final domestic demand probably
increased by nearly 2.5 per cent in volume terms.
At the same time, there
was considerable rebuilding of stocks and a brisk growth of imports.
From
various indicators of activity, there appears to have been some easing of domestic
demand during the second half of the year, particularly as regards investment.
Households' consumption, which had already revived a little in 1976, showed
a real growth of the order of 2.5 per cent in 1977. The upturn was most notice¬
able in purchases of durables and especially motor cars (car registrations increased
by 14.8 per cent between 1976 and 1977).
Part of this represented a "catch-up"
from the very steep decline during the previous three years.
Since growth of real
disposable incomes was probably slower than that of consumption, the down-trend
in the savings ratio observed over the last few years probably continued2.
This
fall in the savings ratio may have been due to the improvement in the domestic
climate in 1 977, notably as regards employment, and to more optimistic expecta¬
tions on the part of households concerning their incomes over the medium-term.
The development of the social insurance system during recent years may also have
encouraged some decline in precautionary saving by households.
In spite of the
upturn, the average level of private consumption in 1977 (at 1970 prices) was
1
At the time the forecasts for 1977 were drawn up, the provisional estimates for 1976
showed an unchanged level of GNP, whereas the figures now show a fall of 1.3 per cent.
2
Movement of household annual savings ratio (national definitions)
1965-1969
1970-1973
1974
1975
1976
8.1
10.5
9.7
7.6
6.2
Table 2
Demand and Output
1976 at current prices
Per
SF million
Percentage change,
volume3
cent
share
1973
1974
1975
1976»
1977»
of GNP
Private consumption
Public consumption
88 500
60.7
2.8
-0.5
-2.9
0.5
19 055
13.1
2.4
1.6
0.7
4.0
1.0
Gross fixed
29 175
20.0
2.9
-4.2
-13.6
-10.7
3.0
19 685
13.5
4.8
-6.4
-11.1
-8.6
2.0
9 490
6.5
-0.5
-0.3
-17.7
-14.6
5.0
136 730
93.7
2.8
-1.4
-5.6
-2.0
2.4
-1050
-0.7
0.0
2.1
-5.3
0.7
1.2
48 050
32.9
7.9
1.0
-6.6
10.2
10.0
43 020
29.5
6.5
-1.0
-15.4
12.7
9.4
5 030
3.4
0.3
0.7
3.4
-0.7
0.4
Gross Domestic Product
140710
96.4
3.0
1.5
-7.4
-2.1
4.0
Gross National Product
145 910
100.0
4.3
asset formation
Construction
Machinery and equipment
Final
domestic demand
Stockbuilding*
Exports of goods and services
Imports of goods and services
Foreign balance*
2.5
3.2
1.7
-7.7
-1.3
GNP implicit price deflator
8.2
7.1
6.8
2.3
0.5
Stockbuilding (actual amount SF billion at 1970 prices)*
2.0
4.1
-1.4
-0.8
2.5
Industrial production
5.4
1.3
-12.6
0.7
5.0
1
2
At 1970 prices.
Provisional.
3
Estimates.
4
Changes expressed as a percentage of GDP in the previous period.
5
Including residual error.
Sources: La Vie Economique; revised national accounts series 1948-1976 (Bureau Federal de Statistique); Swiss submission to the OECD.
Switzerland
probably still lower than in 19733. The decrease in the population caused by
the departure of foreign workers accentuated the decline in consumption over and
above the normal effects of the recession on real incomes4. Real per capita con¬
sumption, which had fallen by 1.6 per cent between 1973 and 1976, rose again
by 2.7 per cent in 1977.
After its very steep decline in previous years, fixed investment picked up
slightly in 1977. The recovery was most apparent in the case of investment in
machinery and equipment, which is estimated to have risen by 5 per cent in real
terms. To judge from the trend in imports of capital goods, the recovery began
in the second quarter of 1976 and gathered momentum subsequently.
The
movement of the index of industrial production of machinery and appliances
(which is admittedly difficult to analyse because of sharp seasonal fluctuations)
shows a smaller growth than that of imports; in view of the increase in exports
of capital goods during that period, this would suggest some substitution of
imported capital goods for Swiss-produced goods. It is difficult to tell exactly
what investments were made in 1 977, but the largest share was probably in modern¬
isation and rationalisation projects, since pressure from competition, notably as
a result of the currency's appreciation, has led to considerable restructuring in
industry (see Part III of the survey). The improvement in general economic
conditions (upturn in production, reduction of spare capacity in certain industries,
probable improvement in profits and lowering of long-term real interest rates) may
have prompted some firms to increase their productive capacity. All in all,
the revival of investment in machinery and equipment has remained modest,
in view of the decline between 1973 and 1976.
Thus, in 1977 the level of this
investment (at 1970 prices) was still nearly 27 per cent lower than in 1973.
According to provisional estimates by the Federal Administration's economic
forecasting group, gross fixed investment in construction rose by 2 per cent in
real terms in 1977, but demand in this sector remained hesitant.
In residential
construction, the number of completed housing units, which continued to fall
during the first half of 1977 (down nearly 27 per cent from a year earlier), rose
by 8 per cent in the second six months, but towards the end of the year the rate
of advance was much more moderate.
Moreover, the number of building permits
issued in the 92 largest towns, after increasing slightly in the first half of the year,
showed a further fall of 22.5 per cent. There were few factors to encourage
housebuilding in 1977: the stock of unsold dwellings remained very considerable
(between 40 000 and 80 000, according to estimates) and the demographic
prospects rather unfavourable.
The only factor that may have imparted some
stimulus to private construction was an improvement in households' expectations
concerning their real incomes. Furthermore, construction demand from the public
sector probably stabilised in real terms at its 1976 level.
In industrial and com¬
mercial building, the volume of new projects, which had risen during the second
half of 1976 and the first six months of 1977, fell back sharply again in the second
half of the year.
Business surveys, suggest that stocks of finished products varied very little
during 1977 from their level in the fourth quarter of 1976, when the down¬
ward adjustment which began in mid- 1975 seems to have come to an end.
On the other hand, there is likely to have been further rebuilding of raw material
stocks since 1976, together with a significant increase in goods in process in
3
Private consumption, in terms of 1970 prices, is estimated at Sw.Fxs.
in 1977, as against Sw.Frs. 60.5 billion in 1973.
4
The
group of economic
experts
has
estimated
that
in
1975-1976
impact of the decline in the foreign population on private consumption was
whereas the overall decrease in consumption for those two years was
60.3
the
billion
cumulative
1.4 per cent,
2.4 per cent.
Table 3
Indicators of households' consumption expenditure
Percentage changes from previous year
1976
1975
1976
1977
1977
Q2
Qt
Q3
Q4
Qi
Q2
Q3
Q4
-3.2
-0.3
3.6
-2.2
-0.4
0.6
0.6
3.7
2.5
4.1
3.1
-8.1
-0.3
2.3
-3.1
-0.1
0.7
1.0
3.4
1.4
2.9
1.8
5.3
0.0
1.3
0.9
-0.3
-0.1
-0.4
0.3
1.1
1.2
1.3
-11.6
13.6
9.7
4.6
11.1
21.1
16.9
13.5
8.9
9.4
8.3
New car registrations
-6.1
7.3
14.8
1.8
14.9
-7.1
21.2
11.3
20.4
18.3
6.9
Nights spent in hotels by residents
-4.8
-3.5
3.6
-7.7
2.5
-4.7
-2.7
5.5
2.6
2.9
3.8
Retail sales, value
volume1
prices
Imports of consumer goods, volume
1
Deflated by dividing value changes by the consumer price index for goods.
Source: La Vie Economique,
Table 4
Indicators of investment In machinery and equipment
Percentage changes from previous year
1976
1974
1975
1976
1977
1977
Ql
Q2
Q3
Q4
Qi
Q2
Q3
Q4
Domestic production
4.3
-8.9
-11.1
3.7
-4.0
0.7
-5.1
-28.2
5.8
-1.4
3.1
8.4
Exports of machinery and equipment
5.2
-3.7
0.6
7.8
-0.3
-1.2
-1.8
5.2
5.2
0.8
12.9
12.1
Imports of machinery and equipment
2.7
-24.8
3.2
15.9
-16.4
-2.5
6.4
29.3
13.8
11.7
23.5
15.3
Source; La Vie Economique.
Table 5
Indicators of construction activity
Percentage changes from previous year
1976
1975
1977
1977
1975
I
II
I
II
I
II
Residential construction1 (number)
-25.6
-42.0
-10.8
-17.9
-33.1
-42.7
-41.1
-26.9
92 towns
-18.4
-40.8
-17.7
-10.2
-26.7
-36.9
-45.7
-36.2
8.9
Large rural communes
-29.7
-49.3
-13.2
-23.9
-34.9
-55.5
-42.8
-16.5
-10.5
Small rural
-34.5
-39.0
4.1
-26.8
-41.3
-46.0
-30.0
-10.8
19.0
-39.3
-16.8
-41.3
-39.3
-28.0
-16.8
-6.0
92 towns
-34.4
-20.0
-38.1
-34.4
-29.7
-24.4
-11.4
Large rural communes
-49.8
-16.4
-46.9
-49.8
-28.8
-16.4
2.1
Small rural communes
-43.2
-7.8
-44.5
-22.7
-22.8
-7.8
1.7
-34.3
-24.0
-35.3
-33.0
-28.0
-19.4
4.6
Dwellings completed
communes
Dwellings under construction'
Building permits issued
8.1
-22.5s
Industrial construction3
New plans (number)
New plans (m*)
Total employment in construction
of which: Construction workers
-43.7
-7.3
21.9
-40.4
-47.4
-26.4
17.5
25.8
-18.8
-35.1
-29.3
-1.9
2.7
-70.6
-72.3
112.0
65.3
-30.7
-18.9
-8.5
-1.2
-21.0
-16.5
-10.0
-6.9
-0.8
-1.6
-21.3
-8.8
-1.0
-24.6
-17.5
-10.3
-7.3
-0.2
-1.8
6.0
-0.6
0.0
6.9
5.2
0.1
-1.3
-0.3
0.3
-1.8
-5.3
1.8
1.3
-4.8
-6.2
-4.4
0.3
3.4
Change in costs
Wholesale price index for building materials'
Index of construction prices in Zurich
1
Figures refer to residential construction activities in communes of over 2 000 inhabitants, representing about 78 per cent of all dwellings built,
cover 595
communes.
2
End-June
and end-December.
3
4
Enterprises' plans for new buildings and extensions.
Including glass and ceramics.
5
92 towns.
Source: La Vie Economique.
From
1971
the
series
t/3
Q
a
ft.
12
OECD Economic Surveys
Diagram 1
Cyclical indicators
Business outlook '
\
-40
Level of slocks '
;:
-*0
Level of orders '
80
..
..
--
.«
'
-«
Ratio of exports to total orders '
40
-40
-M
-80
\
-120
-80
Pro,itsJ
1971
1972
1
Three-monlh moving average.
2
Quarterly survey.
1973
-120
1974
1975
1976
1977
1978
Source: IWETH, Berichte der Konjunkturforschungsslelle.
industry as industrial production recovered.
According to provisional estimates,
stockbuilding's contribution to GDP growth was over 1 per cent in 1977.
The sleep rise in exports of goods and services last year (+10 per cent by
volume) imparted a considerable stimulus to growth, as had already been the
case in 1976.
Assuming an export multiplier of about Is, exports had a growth
impact of the order of 4 per cent of GDP in both 1976 and 1977.
Since the
5 According to the calculations made by the Centre de Recherches Economiques Appli¬
quées at Lausanne ("Créa") with the aid of an econometric model of the Swiss economy,
the short-term multiplier for exports of goods and services is
1.14.
Switzerland
-
13
upswing in activity was also accompanied by a very rapid increase in imports
of goods and services (10.1 per cent), the "ex-post" contribution of the change
in the external balance to GDP growth was only about 0.5 per cent in 1977, but
it is not possible to gauge from this calculation the stimulative effect of exports on
growth of activity.
Industrial output probably rose by about 5* per cent in 1977, roughly
corresponding to the growth in aggregate demand.
Performance differed quite
sharply according to sector, however. The first nine months' figures show a very
rapid advance in the gas, electricity and water sectors (up 33.9 per cent from
the first nine months of 1976) as production returned to normal after the down¬
turn caused by the adverse weather in 19766. A number of other sectors emerged
from the slump in which they had been since 1974 and showed high rates of
expansion in 1977; this was true of plastics, rubber, metals, clothing, wood and
clock and watchmaking.
On the other hand, certain sectors which had already
rallied in 1976, such as textiles and chemicals, again experienced some faltering
of their activity and output levels lower than in the previous year.
Construction
of machinery and appliances picked up only very slowly in 1977, despite firmer
domestic demand for capital goods, whereas the construction-related industries
remained depressed on the whole.
First estimates show that the volume of
farm output rose very slightly in 1977, but its value fell as compared to 1976.
The hotel industry staged a significant recovery, with the total number of nights
spent in hotels (by Swiss residents and foreigners) up by 6 per cent last year.
Employment and labour market
The firmer trend of activity brought a slight improvement in the labour market
situation.
Short-time working, which was still affecting 22 300 persons in the
fourth quarter of 1976, had all but disappeared by the end of 1977.
The number
of persons employed, which had been falling steadily since 1973, rose for the
first time in the third quarter of 1 977.
There was also, at the same time, a marked
slowdown in departures of foreign workers and a steady decline in the number of
wholly unemployed.
At the end of 1977 and in January 1978', unemployment
began to rise again, but this was largely due to seasonal factors.
Total employment had continued to fall, although more slowly, throughout
the first half of 1 977. For the whole year, given the slight increase that occurred
in the second half, the number of persons employed was probably of the same
order as in 19768. Employment gradually stabilised during the year in the building
sector and in industry.
The expansion of production in industry probably there¬
fore reflected relatively large productivity gains. In services, excluding public
administration, the number of persons employed, which had fallen by 2.2. per
cent in 1976, rose again with a particularly marked advance in certain branches
like banking (about 2 per cent) and insurance (2.7 per cent).
In all, the fall
in the level of activity between 1973 and 1977, together with the efforts to achieve
productivity gains because of the Swiss franc's appreciation, caused a large number
6 In the first nine months of 1977 total industrial output was up 6.2 per cent from
a year earlier, while output minus electricity, gas and water rose by only 3.7 per cent.
7 The steep rise in unemployment in January (30 per cent up from December) seems
largely due to adverse weather, which affected activity in the construction sector.
8
The index of total employment probably showed a further very slight fall in 1977.
But the index is not fully representative since in public administration it covens only personnel
employed by the Confederation, and their number has risen distinctly less rapidly in recent
years than the total number of civil servants.
the third quarter of
Furthermore, the index weights are those of
1966; but the share of services,
where employment has risen much
faster than in the other sectors, increased considerably between 1966 and 1976.
Table 6
Population, employment, labour market
Percentage changes from previous year
1976
1973
1974
1975
1976
Q3
Total population1
0.7
0.2
-0.6
-0.9
Labour force1
0.1
-0.6
-5.1
-3.5
0.7
-4.1
Foreigners in gainful employment3
With permits for over a year's stay
With permits for a one-year stay
Seasonal
Border
1977
1977
-12.5
-11.2
14.1
12.0
6.1
-0.4
0.8
-9.2
-10.5
-16.9
-18.2
-13.3
-1.5
-27.6
-43.4
-19.4
10.8
7.6
6.0
-10.3
-13.3
-2.5
Q4
QI
Q2
Q3
Q4
-2.8
0.0
-0.8
-6.4
-4.6
-0.1
-3.7
-2.4
-0.8
-0.4
0.1
Industry
-0.9
-0.7
-7.6
-6.1
-0.5
-4.7
-3.0
-1.7
-0.9
-0.2
0.5
Construction
-2.0
-6.7
-18.9
-8.5
-1.2
-7.3
-6.3
-0.4
-1.0
-0.9
-2.2
1.7
0.9
-1.9
-2.2
0.8
-1.8
-1.0
0.4
0.4
0.8
1.6
-0.2
-0.4
-2.2
0.7
1.6
1.6
0.5
0.2
0.0
-0.4
-1.1
-1.5
-0.2
-0.2
-0.5
0.7
0.0
-0.2
81
221
10 170
20 703
12 020
14 168
15 226
17 528
12 081
8 253
26.4
21.8
26.5
21.9
22.7
22.0
21.1
19.7
55 064
10 012
26 441
22 333
21 259
10 619
4 080
4 090
870
293
584
394
348
177
254
Total employment3
Services4
0.7
Hours worked per week
Industry1
Building
Labour market (numbers)
Wholly unemployed
of whom: Foreigners, per cent
Workers
on
short-time
Dismissals
1
2
3
4
5
Estimated annual average.
Employed at end-August of each year.
Excluding agriculture (average over four quarters).
Excluding general government.
Including overtime until the 4th quarter of 1976.
Sources: La Vie Economique; OECD, Labour Force Statistics.
470
10 220
Switzerland
15
of jobs to be made redundant.
In industry, the number of redundancies may be
estimated at about 150 000 (nearly 15 per cent), while employment in the
construction sector fell by about one-third (90 000 persons) between 1973 and
1977.
Even in the service sector taken as a whole, employment at the end of 1977
was still below its 1973 level.
The number of wholly unemployed, which in January 1977 stood at some
21 000 persons, declined continuously until September.
It then rose steadily until
January 1978 but fell back in February to 14 442 persons or roughly 0.5 per cent
of the working population.
As in the previous two years, the unemployment rate
for men remained, on the whole, a little higher than that for women, whilst the
rate for persons aged under 25 continued higher than the national average.
Furthermore, as from the beginning of 1977 the number of vacancies rose signi¬
ficantly, which might be due to mismatches between labour supply and demand
in certain job categories and in certain regions.
By the fourth quarter of the year,
there were some 7 100 registered vacancies and about 1 1 250 jobseekers.
Some
industries indeed seem to be having trouble in finding skilled workers.
In
construction, the shortage of unskilled bricklayers is also beginning to make itself
felt; the considerable reduction in the foreign workforce probably has something
to do with this development.
Despite the marked decline in employment during the last four years, the
unemployment rate has at no time been very high in Switzerland.
After peaking at
about 1 per cent of the working population in February 1 976, it has since oscillat¬
ed between 0.3 and 0.6 per cent.
This is essentially because the steep cutback
in jobs was accompanied by a sharp fall in the labour force.
The latter decreased
by about 9 per cent between 1973 and 1977, owing to the fall in the number of
foreign workers by more than 27 per cent9 and to the decline in labour force
participation rates among the Swiss population. From the statistics available,
it is not possible to tell with any certainty how far these rates have fallen by sex
and by age group.
But it is probable that a number of women and nominally
retired persons who had gone on working have withdrawn from the labour market
and that more people have opted for early retirement.
Stability of prices and costs
The upward movement of costs and prices remained extremely moderate in
1977.
After their downturn in 1975 and 1976, wholesale prices showed a year-
on-year rise of only 0.3 per cent whilst the increase in consumer prices slowed
to 1.3 per cent, which meant that for the second year running Switzerland
achieved by far the lowest rate of any Member country.
Growth of nominal
wage payments remained very slow, but with a slight increase in real earnings
for the first time in two years.
The very small increase in wholesale prices in 1977 was almost entirely due
to a 1.1 per cent rise in prices of imported products, since prices of Swiss-made
9
Foreign workers subject to police control or holding residence permits by category
of permit (1 000).
August 1973
August 1975
August 1976
August 1977
Over a year's stay
276.5
328.5
327.2
329.8
One-year stay
322.5
239.8
196.2
170.1
Seasonal
193.8
86.0
60.7
67.3
Border
104.6
99.4
85.2
83.1
897.4
753.7
669.3
650.2
Total
OECD Economic Surveys
16
Diagram 2
Trend of pricci
Percentage change on previous year
16
Consumer prices
International comparison
14
2
E.E.C.
10
4
Germany
O.E.C.D. Total
Consumer prices
12
Contribution ol components to overall percentage change
6
4
4
goods
2
2
0
0
Wholesale prices
Contribution of components to overall
change
18
18
IE
16
14
14
12
12
10
10
8
8
6
6
4
4
goods
2
2
0
0
-2
1973
1974
197S
1976
1977
Sources: OECD, Main Economic Indicators; Swiss National Bank, Monthly Bulletin; Swiss Submission
to the OECD.
Table 7
Prices
Percentage changes from previous year
Weight
in
Wholesale price index, 1963 = 100
Raw materials and semi-manufactures
Energy and related products
Consumer goods
Home-produced goods
Imported goods
Average
1973
1977
197É
1974
1975
1976
1977
Q3
Q3
Q4
1.1
-0.3
-1.2
-0.2
-1.6
-2.3
0.2
-0.1
-1.3
2.7
4.0
1.9
1.2
-0.3
0.0
0.1
-0.2
-0.1
3.8
5.1
3.5
-0.6
-3.3
04
Qi
per cent
1968
100.00
4.7
16.1
-2.2
-0.7
0.3
0.5
1.0
1.5
61.42
4.9
18.4
-5.7
-1.7
-0.9
0.1
1.2
0.9
8.96
5.5
20.3
4.2
4.6
0.1
4.6
1.1
1.5
29.62
4.3
9.9
2.9
-0.4
2.5
-0.2
0.4
70.59
4.4
14.0
1.2
-1.1
-0.1
-0.2
29.41
5.6
21.2
-9.8
0.4
1.1
2.1
Q2
100.0
5.6
9.8
6.7
1.7
1.3
1.3
1.0
1.0
1.4
1.4
1.3
65.8
4.9
10.9
5.3
0.0
1.0
-0.1
-0.4
0.3
1.1
1.2
1.3
60.3
5.1
11.3
5.3
0.0
1.0
-0.1
-0.3
0.4
1.3
1.3
1.2
33.5
4.5
10.4
5.9
-1.5
-1.1
-0.4
-0.1
1.6
1.7
6.0
9.0
16.4
-0.5
3.2
1.8
-2.2
2.5
2.9
2.4
20.8
4.7
10.7
6.7
1.3
0.8
0.5
0.3
0.1
0.5
5.5
3.6
6.0
5.2
0.0
-0.4
-0.7
-1.0
-1.0
-0.7
-0.5
0.6
Services
34.2
6.7
7.9
9.0
4.6
1.8
3.8
3.5
2.1
1.8
1.8
1.3
Rents
17.0
7.3
7.6
9.8
4.3
3.4
2.4
1.9
1.3
1.1
Other services
17.2
6.1
8.3
8.1
4.8
4.2
4.6
2.2
2.4
2.6
Export prices'
3.4
13.1
3.0
-0.7
1.8
0.5
-1.1
1.1
3.1
1.7
0.5
Import prices2
3.6
19.0
-3.5
-5.2
6.0
-5.7
-3.0
6.6
10.7
5.6
1.5
Consumer price index,
1966
Goods
Non-durables
Food
Heating and lighting
Other
Durables
1
2
100'
From October 1977, a new index, September 1977 = 100.
Average value index.
Source: La Vie Economique.
to
a.
18
OECD Economic Surveys
goods showed almost no change.
The rise in prices of imported goods, which
had begun in the second half of 1976, continued very appreciably in the first
six months of 1977, but there was a turnaround in the second half of the year
when these prices fell below their level of twelve months earlier.
The trend was
determined very largely by the changes in the effective parity of the Swiss franc
(slight depreciation between mid- 1976 and mid- 1977, followed by a steady appre¬
ciation since), but it was also influenced by the movement of world prices of raw
materials.
The stability of wholesale prices of home-produced goods is essentially
due to the steady fall in unit labour costs at a time when, despite a pick-up in
demand, the margin of spare capacity has not been reduced enough to put any
upward pressure on prices.
The overall price index followed the same time path
as that of imported merchandise prices and in January 1978 stood 2.4 per cent
lower than in January 1977.
For 1977 as a whole, prices of raw materials and
semi-manufactures showed a slight fall, prices of energy and related products
remained stable and prices of consumer goods rose 2.5 per cent.
The rise in consumer prices was remarkably moderate in 1977 (1.3 per cent),
continuing the trend that began in 1975.
A slight surge occurred in the middle
of the year, however, as the result of faster rising prices for a number of food
products sensitive to weather conditions and a spurt in prices of imported goods.
These showed a year-on-year rise of 2.5 per cent in 1977 as against a fall of
approximately 1 per cent in 1976.
Prices of home-produced goods, on the other
hand, eased back to an increase rate of 1.1 per cent compared with 2.3 per cent
in the previous year.
This remarkable stability of domestic prices is attributable,
among other things, to the marked deceleration in service prices, which slowed
from a year-on-year rise of 4.6 per cent in 1976 to one of 1.8 per cent in 1977.
The continuation of a very moderate trend in wage payments was probably a
decisive factor in this regard.
The trend in rents, which was favourably influenced
by the fall in mortgage rates and by the large stock of unsold dwellings, also helped
to keep consumer prices down in 1977.
On the other hand, public service prices,
which were probably affected by the phasing of the cost increases of previous
years, rose slightly faster than prices of private services.
With regard to prices
of goods other than food and energy products, prices of non-durables showed an
extremely small increase while those of durables fell slightly.
In January 1978,
the consumer price index stood at the same level as in December and the rise
over twelve months was reduced to 1 per cent.
Despite the improvement in the labour market, growth of nominal wage
payments was again very small in 1977, approximately of the same order as in
1976.
To judge from the payments to workers who were accident victims, hourly
earnings in the economy as a whole rose a little more rapidly in the first nine
months of the year than in the corresponding period of 1976, notably because
of a steeper increase in payments in the construction sector which was probably
due to the firmer trend of activity there.
Monthly earnings, on the other hand,
appear to have risen a little less than in 1976, given the smaller increase in the
number of hours worked.
But real earnings, both hourly and monthly, which
were virtually flat in 1976, probably increased slightly in 1977 with the further
slowdown in prices.
No information is available on the other earnings categories,
but the upturn in activity may have brought some inprovement in incomes of
independent entrepreneurs.
Table 8
Earnings Wage1
Percentage changes from previous year
1977
1974
1975
1976
1977
QI
Q2
Q3
Q4
Qi
Q2
Q3
Q4
Hourly earnings in industry,
craft trades and construction
13.7
(in real terms)'
(3.6)
Industry and craft trades
(in real terms)3
13.0
(2.9)
15.5
Construction
(in real terms)'
(5.2)
7.9
(1.1)
2.1
1.4
(-0.9)
(-0.3)
1.2
(-0.3)
1.2
(-0.1)
0.8
(-0.3)
1.7
2.0
2.2
(0.7)
(0.6)
(0.7)
8.5
1.9
3.2
2.0
1.5
1.1
1.0
1.4
1.9
(1.7)
(0.2)
(0.2)
(0.5)
(0.2)
(0.0)
(0.0)
(0.0)
(0.4)
5.9
(-0-7)
-0.5
-1.1
-1.3
(-2.2)
(-4.0)
(-2.8)
0.2
-1.1)
0.0
-1.1)
3.7
4.1
3.2
(2.7)
(2.7)
(1.7)
Monthly earnings in industry,
craft trades and
construction
(in real terms)1
14.5
(4.3)
6.6
(-0.1)
1.5
1.6
(-0.2)
(-1.4)
1.9
(0.4)
0.9
-0.4)
1.6
2.1
1.4
1.7
(0.5)
(1.1)
(0.0)
(0.2)
1.6
2.1
1.2
1.6
(0.5)
(1.1)
to
Industry and craft trades
(in real terms)'
13.9
Construction
16.4
(in real terms)'
Hourly earnings in all branches
of the economy
(in real terms)'
(6.0)
13.9
(3.7)
1.6
(0.7)
(0.0)
3.9
(-2.6)
7.5
(0.7)
1.9
(-1.1)
0.7
1.1
(-0.6)
(-2.2)
2.5
1.6
(-0.1)
(-0.5)
2.1
(0.6)
1.1
(-0.4)
1.7
(0.2)
0.8
-0.5)
0.9
-0.4)
1.2
(-0.1)
-0.2)
1.6
2.1
2.1
2.1
(0.5)
(1.1)
(0.7)
(0.6)
1.1
1.6
1.9
2.5
(0.0)
(0.6)
(0.5)
(1.0)
Males
13.8
7.6
1.6
2.5
1.8
1.2
1.0
1.9
1.9
2.9
14.2
7.4
2.0
2.4
1.7
1.7
2.1
0.0
1.7
-0.8
(in real terms)'
14.2
(4.0)
6.8
1.8
1.8
2.1
1.3
2.0
2.0
(0.1)
(0.1)
1.2)
(0.6)
(0.0)
(0.9)
(1.0)
1.3
1.6
-0.1)
(0.1)
Males
14.3
6.5
1.8
1.9
2.2
1.3
1.9
1.9
1.2
1.9
Females
13.5
9.3
1.9
1.8
2.0
1.4
2.7
3.5
2.1
-0.3
9.8
6.7
1.7
3.0
1.5
1.3
1.1
1.0
1.4
Swiss consumer price index
1.3
The data are derived from statistics of earnings of workers (operatives) who have been victims of accidents.
Deflated by the consumer price index.
Source: La Vie Economique.
5
(0.1)
Females
Monthly earnings in all branches
of the economy
1
2
(3.7)
7.4
1.5
1.3
20
OECD Economic Surveys
II
EXTERNAL RELATIONS
Persistence of a very large current surplus
Exports continued to rise briskly in 1977, after their sharp rebound in the
previous year.
Their growth, year-on-year, was 13.8 per cent by value (Sw.Frs.)
and 11.8 per cent in volume terms.
Exports of consumer goods made the most
rapid headway, in both volume and value terms, notably as the result of a marked
acceleration in sales of durables.
But exports of raw materials and semi-finished
products, which had already risen steeply in 1976, continued buoyant too.
Despite the sluggishness of non-residential investment in most of the other Member
countries, exports of capital goods grew by nearly 8 per cent in volume and 9 per
cent in value terms.
Part of that performance reflects a value increase of nearly
35 per cent in exports of machinery to the oil-producing countries.
Aggregate
sales to these countries, moreover, continued to advance rapidly to reach close
to 9 per cent of the total value of Swiss exports in 1977.
Exports to Germany
and Italy also made significant progress, but there was a slowdown in sales to
France and the United States, whilst exports to the EFTA countries and the
countries with centrally-planned economies rose only very moderately.
This very strong export performance is especially remarkable in that the
growth of Switzerland's markets probably slowed appreciably in 1977.
Very
tentative calculations by the Secretariat suggest that appreciable gains in market
shares, of the order of 5 to 6 per cent in volume terms, were achieved by Swiss
exporters.
The Swiss franc's slight effective depreciation from mid-1976 to mid1977, coupled with lower unit labour costs and financial charges, helped to offset
part of the impact of the steep relative deterioration in Switzerland's price compe¬
titiveness since the general currency float was introduced in 1973.
It is quite
likely, too, that the easing of bank deposit rates made it possible to offer attractive
credit terms to international customers.
Furthermore, the relative weakness of
domestic demand seems to have encouraged certain industries to increase their
penetration of foreign markets, notably the food, paper, construction materials,
metals and furniture industries.
It is probable, as well, that the large-scale
rationalisation and restructuring projects underway for some years now (see
Part III) have begun to produce results.
The upswing in imports which began early in 1976 continued at a rapid pace
in the first half of 1977.
There was some loss of momentum during the second
six months, and for the year as a whole the volume growth of imports was of the
order of 10 per cent, which represents an elasticity in relation to industrial pro¬
duction and GNP of 1.7 and 2.4, respectively.
Given a rise in prices of about
6 per cent, value growth of imports, on a Swiss franc basis, exceeded that of exports
(16.7 compared with 13.8 per cent10).
Purchases of capital goods showed the
steepest increase, in both volume and value terms, in line with the recovery in
productive investment.
Although making distinctly slower progress than in 1976
(when restocking was a major influence), imports of raw materials and semi-finished
goods increased in real terms by 10.5 per cent.
Energy imports, on the other
hand, rose only very slightly.
Imports of consumer goods continued to grow
10
In view of the substantial changes that may have occurred in the commodity pattern,
the rise in prices based on indices of average values is bound to be rather approximate.
Table 9
Exports by geographical markets
Percentage change s by value from previous year (in SF)
1976 values
SF
Per cent
million
share
1977
1976
1974
1975
1976
1977
Q3
Q4
Qi
Q2
Q3
Q4
Europe
24 878
67.2
18.0
-6.7
10.2
12.8
11.3
13.5
15.7
10.2
14.6
EEC
16 679
45.0
14.2
-6.9
14.9
16.4
14.3
18.1
18.0
12.0
19.5
16.5
Germany
5 761
15.6
15.3
2.1
16.5
21.0
13.3
18.7
20.0
12.9
26.9
24.0
France
3 366
9.1
17.4
-4.6
13.5
9.5
21.2
7.7
12.9
8.3
4.4
12.0
Italy
United Kingdom
2 758
7.4
13.1
-18.3
19.6
23.3
18.3
23.1
26.3
27.1
29.5
13.5
2 182
5.9
11.5
-19.2
6.4
10.0
8.0
19.8
11.3
7.3
13.8
8.1
Other
2612
7.1
11.7
-1.0
15.9
13.4
10.4
23.9
17.3
4.5
16.3
16.5
-1.5
11.2
EFTA
4 257
11.5
25.3
-13.3
4.2
5.3
8.1
10.3
11.4
7.9
4.4
East European countries
1988
5.4
31.5
8.0
3.8
6.4
12.7
-0.4
12.9
-8.3
8.1
12.6
Other European countries
1954
5.3
21.8
-3.6
-5.4
4.7
-4.9
1.6
7.2
18.2
2.8
-7.1
4719
12.7
10.3
-6.3
5.3
10.2
-2.5
4.1
3.9
8.6
20.6
7.7
2 521
6.8
2.3
-14.7
18.1
9.8
8.5
13.0
4.0
13.7
14.5
7.1
5 307
14.3
22.8
-3.1
23.7
18.5
24.1
28.0
21.1
19.5
6.3
1010
2.7
7.0
-25.2
9.1
0.8
6.6
15.5
9.9
3.8
-1.1
-5.8
1740
4.7
31.7
18.2
2.2
29.0
11.2
13.4
30.8
35.9
16.7
32.6
Oceania
402
1.1
25.5
-24.7
7.8
-9.5
1.8
20.8
46.6
-14.6
--14.5
-34.2
Total
37 045
100.0
18.0
-5.4
10.8
13.8
10.7
14.3
17.3
12.4
15.9
10.5
2 896
7.8
40.3
38.4
32.3
26.4
41.1
31.4
37.9
31.0
18.1
22.4
America
of which: United States
Asia
of which: Japan
Africa
Memorandum
32.1
item:
Oil-exporting countries
Sources: La Vie Economique, Swiss submission to the OECD.
Table 10
Foreign trade by commodity groups
Percentage changes from previous year (by value and by volume)
1976 values
SF
million
Per
cent
share
1975
1976
1977
Q3
Imports, cif, total
value
36 871
100.0
volume
1977
1976
1974
Q4
Ql
Q2
Q3
Q4
17.3
-20.2
7.6
16.7
13.7
20.6
20.9
21.9
17.3
8.1
-1.5
-17.2
13.6
10.1
20.7
24.3
13.2
10.0
10.9
6.5
25.2
-27.0
11.0
17.7
24.9
28.2
27.3
26.4
14.2
5.2
1.3
-21.6
21.3
10.5
35.0
30.9
16.7
9.8
10.4
3.8
63.2
-18.7
11.6
3.9
3.5
22.7
0.2
20.1
5.2
-8.9
Raw materials and
semi-finished goods
value
15 286
41.5
volume
Fuels and lubricants
value
3 807
10.3
5 505
14.9
volume
Investment goods
value
volume
Consumer goods
value
12 273
33.3
volume
Exports, fob, total
value
37 045
100.0
volume
-7.4
-8.7
5.6
1.3
-1.6
25.8
-3.5
14.1
2.1
-6.8
5.6
-18.2
-1.6
21.2
-1.6
19.6
17.1
17.1
29.9
21.0
-1.8
-21.3
-0.1
16.0
3.8
22.9
13.5
9.9
22.6
18.4
4.4
-11.9
6.8
17.4
12.6
11.7
20.4
19.1
19.8
10.9
-3.2
-11.6
13.6
9.7
21.1
16.9
13.5
8.9
9.4
8.3
18.0
-5.4
10.8
13.8
10.7
14.3
17.3
12.4
15.9
10.5
4.5
-8.2
11.6
11.8
10.5
15.6
16.0
8.9
13.7
10.0
Raw materials and
semi-finished goods'
value
15 256
41.2
volume
Investment goods
value
12 804
34.6
volume
Consumer goods
value
8 926
24.1
volume
26.6
-13.6
19.8
15.8
20.1
24.0
22.0
15.2
19.1
8.5
6.6
-11.8
22.8
13.3
20.7
23.4
23.0
8.1
14.2
10.0
13.8
6.6
4.8
9.1
3.2
10.1
12.2
2.6
12.0
10.1
5.3
-2.0
0.9
7.9
-0.1
7.0
6.9
1.0
12.2
10.9
10.8
-7.2
6.2
17.1
8.6
6.5
15.8
22.0
16.4
14.6
0.3
-10.4
11.0
15.0
11.9
17.2
17.8
22.2
15.1
9.1
1977
1976
Ql
Memorandum
Q3
Q4
Ql
Q2
Q3
Q4
items:
Annual rate of growth on previous quarter,
Total imports, cif, by 1^alue
Total exports, fob, by value
1
Q2
s.a.
Exports of chemical products account for a large share of this item.
Sources: La Vie Economique; OECD, Main Economic Indicators.
17.1
18.0
26.6
23.5
18.0
19.9
9.2
9.4
5.7
30.7
-1.3
25.5
18.3
8.5
9.5
6.5
Switzerland
23
relatively briskly with a marked increase in purchases of durables, especially motor
cars, a distinctly more moderate rise in imports of non-durables and a virtually
flat trend for food products. The steep rise in imports of capital goods and con¬
sumer durables other than motor vehicles might reflect increased penetration of
the domestic market by foreign competitors.
Given the export and import trends described above, the trade balance
(on a balance-of-payments basis, fob/fob") showed a surplus of about Sw.Frs.
1.5 billion in 1977, a little less than in the previous year.
This result was
influenced, however, by exports of non-monetary gold amounting to more than
Sw.Frs. 800 million; if this factor is discounted, the trade balance was close to
equilibrium.
The appreciable surplus of the last three years is thus in marked
contrast with the situation from 1960 to 1974, when there were large deficits.
Unlike the trend observed in most of the other Member countries, the deterioration
in the terms of trade caused by the oil price surge in late 1973 and early 1974
was very moderate in Switzerland (of the order of 5 per cent).
And this dete¬
rioration was more than offset by the improvement that occurred in 1975 and
1976 as a result of the currency's effective appreciation and a tendency for Swiss
export goods to become increasingly sophisticated and specialised.
Despite
another deterioration in 1 977, the ratio of export prices to import prices was still
at the same level as in 1973.
The volume trend of trade over the past four years
was also extremely favourable.
Between 1973 and 1977 imports rose by only
about 2.3 per cent, whereas exports went up by 19.7 per cent.
The considerable surplus recorded on current invisibles since 1975 probably
widened again somewhat in 1977 to reach about Sw.Frs. 7 billion.
Net inflows
on tourism account, which had declined in recent years as the Swiss franc appre¬
ciated, probably picked up, or at least stabilised, since the number of nights
spent by foreign tourists in Switzerland rose faster than that spent by Swiss
residents abroad.
The surplus on investment income may have been of the same
order of magnitude as in 1976, roughly Sw.Frs. 5.3 billion.
Net outflows of
capital have continued to increase during the last two years, but the downward
trend in interest rates and the currency's appreciation have helped to reduce yields
in Swiss francs.
The upward trend in net receipts on account of miscellaneous
services (which include bank commissions, licence fees, film royalties, etc.) prob¬
ably continued and, all told, the balance on services is likely to have shown a
slight improvement.
In view of the further departures of foreign workers and
the very small rise in wages, net payments resulting from transfers of unspent
income of foreign workers with one-year permits, or seasonal workers, probably
shower a further decrease, though less pronounced than in 1976.
Net official
transfers have remained relatively small during the last few years
of the order
of Sw.Frs. 400 million
and there is unlikely to have been any significant change
in
1977.
In all, the current account surplus in 1977 probably amounted to about
Sw.Frs. 8.5 billion or 5.5 per cent of GNP, the highest percentage for any Member
country.
In dollar terms, the surplus was of the same order of magnitude as in
Germany ($3J billion) and was exceeded only by Japan (see table 13).
The
increase in Switzerland's current payments surplus since the oil crisis has been
spectacular, therefore.
Whereas from 1 970 to 1 973 the current account had been
close to equilibrium, over the four years to end-1977, the cumulative surplus has
1 1
The balance-of-payments statistics published by the Swiss authorities and the national
accounts figures show imports on a cif basis.
To convert these to fob estimates, the
Secretariat has deducted 5 per cent from the value of imports.
Other minor adjustments
have to be made to export and import figures to obtain a trade balance (fob/fob) in line
with the IMF and OECD definitions.
The adjustments concern, among other items, contract
work, electric power exchanges and transit trade.
Table 11
Balance of payments
1976
1974
1975
1976
1977
1977
II
US * million
Seasonally adjusted1
11945
13 609
15 458
18 330
7 390
8 070
8 540
9 790
13 690
13 177
14 657
17 770
6 820
7 840
8 300
9 470
-1745
432
801
560
570
230
240
320
Services and private transfers, net
2 055
2 288
2 852
1 400
1440
-139
-156
1 300
1470
Official transfers, net
-133
2910
171
2 587
3 497
3 470
1 870
1630
1680
1790
1980
Exports, fob
Imports, fob
Trade
balance
Current balance
I
Not seasonally adjusted
Current balance
171
2 587
3 497
3 470
1690
1810
1490
Capital movements, net'
276
-1052
-895
-2 801
-1055
157
-3 623
822
2 436
2 601
-822
-1004
825
-1650
-730
-274
-2160
-3 653
-73
-1797
-1880
1807
-2 893
1 096
447
1535
2 602
669
633
1969
-2 133
2 802
Non-monetary capital
Banking funds'
Balance on official settlements'
SF
Seasonally adjusted1
Exports, fob
Imports, fob
Trade
balance
Current balance
As a percentage of GNP
37 145
35 145
38 640
43 850
18 760
19 880
21500
22 350
42 344
34 027
36 637
42 359
17 360
19 280
20 890
21470
-5 199
1 118
2 003
1491
1400
600
610
880
510
6 680
8 740
8 490
4 720
4 020
4 080
4 410
0.3
4.6
6.0
5.6
Seasonal adjustment by the Secretariat.
Not adjusted for swap operations between the Central Bank and the commercial banks.
Sources: Swiss submission to the OECD; Secretariat estimates.
million
Switzerland
Table
12
25
Structure of current Invisibles
SF million
1967
1970
1973
1976
2 397
3 965
5 307
6 737
Travel
1710
2 060
2 640
2 460
Investment income
1535
3 040
4 740
5 330
Other
1 215
1 930
2 900
3 480
Overall balance1
of which;
services'
Foreign border workers' earnings
Migrants' remittances'
Official transfers
-560
-930
-1850
-1960
-1065
-1 350
-1790
- 1 030
-99
-181
-395
-390
1
Difference between the estimated trade balance (fob/fob) and the current balance.
2 Licences and management fees, expenditure on personnel and equipment by international organisations
whose headquarters are in Switzerland, expenditure on diplomatic representation, bank charges, film rentals,
landing and fuelling charges paid by airline companies, etc.
3
Net earnings, not spent in Switzerland, of seasonal workers and workers with permits for a one-year
stay.
Sources: La Vie Economique and Annuaire statistique de ta Suisse.
amounted to nearly $10 billion. During the same period, the OECD area's aggre¬
gate current balance registered a considerable deficit, the counterpart of which was
largely to be found in the surplus accumulated by the OPEC countries.
Comparative trends in current balance positions should be seen not only in
the context of differences in demand pressure, but also in relation to production
levels.
Owing to the steep fall in productive investment over the period and the
economic obsolescence of part of the capital stock, as a result of the currency's
appreciation, the margin of slack in manufacturing industry is probably not any
greater in Switzerland than in many other industrialised Member countries12.
In
terms of output levels, however, the situation is very different.
Because of the
contraction of total productive capacity and despite the appreciable strengthening
of activity in 1977, both industrial output and real GNP were still short of their
1973 levels, whereas in the other countries the 1973 levels were exceeded.
This
trend, which is partly due to the fact that in Switzerland there has also been a fall
in the resident population, is largely responsible for the enormous current surplus
accumulated since 1975.
Furthermore, given the relatively high price-inelasticity
of exports, due to the traditional quality of Swiss products, their high degree of
specialisation and the accelerated redeployment of production, the appreciation
of the real exchange rate13 has not made it possible to correct this development.
Capital movements and exchange rate
Due to the persistence of statistical lacunae, inflows and outflows of non¬
monetary capital still cannot be gauged accurately.
Capital exports, as repre¬
sented by issues of loans, debt certificates ("notes") and shares by non-residents
or credits from Swiss banks, are known, since they require prior authorisation.
According to data which are still provisional, capital outflows subject to author¬
isation amounted to about Sw.Frs. 18 billion in 1977, which would be slightly
less than in the previous year. There is no information, however, concerning
investments made in Switzerland by non-residents, notably in the form of purchases
12
13
This is what business surveys, in particular, would seem to indicate.
Nominal effective exchange rate adjusted for cost or price differentials as between
Switzerland and abroad.
OECD Economic Surveys
26
Diagram 3
Structure of the balance of payments
S billion
$ billion
1
1
0
0
-1
-1
Trade balance (Fob/Fob)
-2
-2
4
3
3
2
2
Services, net
1
1
0
0
0
0
Transfers, net
-1
-1
4
3
3
2
2
Current
balance
1
1
0
0
-1
-1
4
3
3
Non-monetary capital,
2
net
2
1
1
0
0
-1
-1
~6
5
5
Balance on non-monetary
transactions
4
4
3
H 3
2
2
1
J
0
1963
1
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
0
1
Secretariat estimates.
Sources: La Vie économique, Annuaire statistique de la Suisse and Secretariat estimates.
Table 13
International comparison of current balance
US $ billion
1970
1971
1972
1973
1974
1975
1976
1977
1970-1973
1974-1977
Germany
0.9
0.9
0.8
4.3
9.7
3.8
3.4
34
6.9
Switzerland
0.1
0.1
0.2
0.3
0.2
2.6
3.5
34
0.7
93
Japan
2.0
5.8
6.6
-0.1
-4.7
-0.7
3.7
14.3
93
Netherlands
-0.5
-0.2
1.3
2.4
2.1
1.7
2.4
United
-0.4
-4.0
-9.9
-0.4
-2.3
11.6
-1.4
Other OECD countries
1.9
4.5
4.6
-3.6
-37.9
-25.3
-37.6
-30 J
OECD total
4.0
2Ï
-323
-6*
-26.0
-30
61!
303
States
OPEC countries'
1
Arab
34
2Î
The countries included under this heading are: Algeria, Bahrein, Ecuador, Gabon,
Emirates and Venezuela.
Source: OECD Secretariat.
9
42
11
i
-18
37
204
3.0
6
-14.7
-10
7.4
13H
17.6
-95 J
155
1714
Indonesia, Iran, Iraq, Kuwait, Lybia, Nigeria, Oman, Qatar, Saudi Arabia, United
28
OECD Economic Surveys
Diagram 4
Change in the current balance
and in the relative level of activity (1973-1977)
20
.sw
.
10
#,
UK»
..
°
FL.
B
;5-io
'
10
,GR
0
«ic
GE
«|
2°
«F
|S
ca»#«dk
|i
US
1 g -20
S.
-lo ||
AT
|1
.
g.
"2° I I
SP
I
-30
S»
AU
-30*1
S
NO
.E
-40
-40
-50
-50
-60
-60
-70
2E
-70
-80 L
-80
-20
-10
0
10
20
30
Rwlëtivi IbvbI of tctivity
in per cant
SW = Switzerland,
UK = United Kingdom,
FL = Finland,
J = Japan,
I = Italy,
IC = Iceland,
GE = Germany,
B = Belgium-Luxembourg,
CA = Canada,
DK = Den¬
mark,
US = United States,
S = Sweden,
AU = Australia,
F = France, GR = Greece,
AT = Austria,
1
SP = Spain,
NO = Norway,
NE = Netherlands.
The change in the current balance (Y) is calculated using the following formula:
Current balance in
1977
current balance in
1973
Y =-
-
(Imports of goods and services + Exports of gods and services) in 1973
2
The relative level of activity is measured by the difference between the rate of growth of GNP
of each country during the period and the weighted rate of growth of GNP of its ten main trading
partners. The weights are the shares of each partner in the exports of each of the countries.
Source:
Secretariat estimates.
of shares, bonds, shares in investment trusts or real estate.
Nor are there any
statistics on direct investment.
Changes in the current balance and in the balance
on official settlements gives some idea, however, of net capital movements broadly
defined (including bank capital) over a given period.
On this basis, it would
appear that net outflows of capital in 1977 were smaller than in 1976 (about
Sw.Frs. 3.5 billion as against Sw.Frs. 5.2 billion).
Switzerland
29
The year-on-year nominal appreciation in the Swiss franc's effective exchange
rate was very moderate in 1977, of the order of 2 per cent compared with 1976.
Allowing for the inflation rate differentials between Switzerland and its trading
partners, the Swiss franc even depreciated perceptibly in real terms.
There were
widely contrasted movements within the year, however.
The downward drift
which had begun in mid-1976 continued throughout the first quarter of 1977.
It
levelled off in the spring, and then there was an extremely rapid appreciation from
June onwards. As far as can be judged, the current surplus for the first half-year
was more than offset by heavy capital outflows14, the weakening of the Swiss franc
being accompanied by a slight fall in the official reserves15.
The Swiss franc's
appreciation in the second half of the year seems to have been due to some widen¬
ing of the current surplus and upward pressures created by capital movements when
the international exchange markets became unsettled, notably by the sharp fall of
the dollar.
During that period, the Central Bank had to intervene for very large
amounts on the exchange market16.
In all, the Swiss franc appreciated in
effective terms by about 14 per cent from January to December.
This
movement accelerated in early 1978, with a further appreciation of more than
10 per cent between end-December and end-February.
Against the dollar the
appreciation over the same period reached around 12 per cent.
Of all the OECD countries, Switzerland is the one whose currency has
appreciated most over the last few years.
From the first quarter of 1970 to the
end of February 1978, the weighted rate of appreciation of the Swiss franc
exceeded 90 per cent in nominal terms. Since the introduction of the general
currency float (end-March 1973), the Swiss franc has appreciated by nearly 70 per
cent, which in effect represents an upward trend rate of around 10 per cent a year.
On either side of this average, however, there have been considerable fluctuations
following a fairly regular pattern of phases of marked appreciation followed
by phases of moderate depreciation or relative stability.
The movement of
the weighted average exchange rate also conceals extremely wide deviations
as against various other currencies. Against the Italian lira and sterling, the
Swiss franc appreciated by 170 per cent and 125 per cent, respectively, over the
period from the end of March 1973 to the end of February 1978; against the
dollar, it rose by 80 per cent.
The relationship between the Swiss franc and the
currency of the Federal Republic of Germany, Switzerland's main trading partner
as well as one of its chief competitors on world markets, had also altered quite
considerably; during the period under review the Swiss franc moved up about
30 per cent against the Deutschemark.
This tendency for the Swiss franc to appreciate, over the medium-term can
be explained to a large extent by the trend in cost and price differentials between
14
The conclusions that may be drawn from a quarterly estimate of capital movements
based on changes in the current balance and in the balance on official settlements should
be approached with great caution.
Owing to changes in leads and lags, very substantia]
divergences may occur in the short term between trade settlements and the transactions
recorded in the customs statistics.
Furthermore, there are no statistics on the trend of current
invisibles in the course of the year. The Secretariat's quarterly estimates of the current
balance are therefore subject to a significant margin of error; moreover, the changes in
the balance on official settlements, even adjusted for swaps with the commercial banks, do
not reflect the full amount of the National Bank's interventions on the exchange market,
because of the compulsory conversion of certain capital exports into dollars with the National
Bank.
15
Not allowing for changes resulting from swap agreements with the commercial banks.
16 The official figures show that the Central Bank's purchases on the exchange market
over the whole of 1977 amounted to Sw.Frs.15.5 billion, the bulk of which represents inter¬
ventions during the second
half of the year.
Since the dollar sums
transferred
for
the
compulsory conversion of capital exports subject to authorisation amounted to the equivalent
of Sw.Frs. 11.5 billion, the net amount of the Central Bank's interventions was Sw.Frs 4 billion.
OECD Economic Surveys
30
Diagram 5
Short-term trend in the S win franc exchange rate
Third week of March
1973 =
100
270
270
260
/
260
250
250
/
240
240
/
230
230
/
Lire per SF1 /
220
220
210
210
/
200
2 CO
190
190
180
f. per SF'
180
170
170
160
160
FF per SF1
150
150
1
140
140
In effective
terms
i
130
130
US S per SF'
,.y
120
120
DM per SF'
110
W
110
J 100
100 L
JFMAMJJAS
ONDJFM
1976
1
Unit of foreign currencies per Swiss franc.
Source: OECD Secretariat.
AMJ
JAS
1977
ONDJ
FM
1978
Switzerland
Diagram 6
31
Medium-term trend in the Swin franc exchange rate
First quarter 1973 = 100
170
A.
170
EFFECTIVE EXCHANGE RATE AND INDICATORS OF COMPETITIVENESS
160
160
Relative export prices
of manufactured goods
150
140
A-
y
150
y
140
Effective exchange
130
130
Relative labour
120
120
costs
/
\
/
110
110
Relative
consumer prices
100
100
130
130
B.
REAL EFFECTIVE EXCHANGE RATE'
Calculated from
_^
120
/
Calculated from
-
relative consumer
^\ prices
relative labour
120
V
costs
110
110
y-.
100
-
100
J
/
/
S
Calculated from relative export
prices of manufactured goods
I
II
III
1973
1
2
IV
I
II
III
1974
IV
I
II
III
1975
IV
I
II
III
1976
IV
I
II
III
IV
1977
I
1978
Trend for the period January 1973-January 1978; Y = 10.33 t + 97.44
The trend in the
real effective exchange rate is calculated by dividing the index for the
nominal exchange rate by the inverse of the index of relative costs or prices.
Source: OECD Secretariat.
32
OECD Economic Surveys
Switzerland and the other Member countries".
Whatever indicator of competiveness is used
unit labour costs, export prices or consumer price index
the weighted nominal appreciation of the Swiss franc has tended to be more Tapid
than the fall in Switzerland's relative costs or prices by comparison with abroad,
which has therefore resulted in an appreciation of the exchange rate in real terms.
Apart from the income effects mentioned earlier, it should be remembered that
the interaction between the currency's appreciation and the reactions of
prices/wages have probably played a very important role in the cumulative pro¬
cess of absorbing inflationary pressures.
The Secretariat has estimated that the
Swiss franc's weighted real appreciation over the period from the first quarter of
1973 to the fourth quarter of 1977 was between 8 and 20 per cent, depending
on the indicator used.
In view of the numerous difficulties associated with this
type of calculation, the results should be approached with some caution.
Never¬
theless, it is probably true to say that Switzerland's price competitiveness has
deteriorated appreciably during the last few years.
To judge from export perform¬
ance, Switzerland's competitive capacity, of which price competitiveness is only
one factor, has nevertheless held up very well, notably because of a fall in unit
profit margins, the traditional quality of Swiss products and their high degree of
differentiation18.
Nor is there any doubt that the large-scale structural readjust¬
ments of production, which followed the currency's appreciation, have begun to
yield results.
The restructuring projects now under way in the Swiss economy are
briefly described in Part III.
Ill
CERTAIN STRUCTURAL ASPECTS
Switzerland has undergone important structural changes during recent years.
The most important of these have been the shift in demographic trends, increased
dependence on abroad and an extensive process of restructuring and rationalisation
17
The following simple econometric calculations suggest that when Switzerland's
relative costs or prices fall by 1 per cent, the Swiss franc appreciates by 1.1 to 1.4 per cent
depending on the indicator used.
Ln (TCE) = 1.46 Ln (PCR) +11.52
(
R2 = 0.867
Ln (TCE) =
R2 = 0.809
Ln (TCE) =
R2 = 0.959
(18.7)
DW = 0.42
SD - 0.05
Ln (CMDR) + 9.65
(
(17.5)
DW = 0.93
SD = 0.06
Ln (PREM) + 9.59
(
(41.6)
DW=1.12
SD = 0.03
The definition of the variables is as follows:
TCE
Effective exchange rate of the Swiss franc
PCR
CMDR
PREM
R2
Relative consumer prices
Relative unit labour costs in manufacturing industry
Relative export prices of manufactures
Coefficient of multiple correlation
DW
Durbin and Watson "D" value
SD
Standard deviation of the aggregate estimate of the equation.
The Student "t" values are given in brackets. The period of estimation runs from the first
quarter of 1973 to the fourth quarter of 1977.
18
For a more detailed analysis of the impact of the currency's appreciation on Switzer¬
land's competitive position, see the previous OECD Economic Survey, March 1977, pages 28
to 38.
Switzerland
33
in the main industries. This last development has admittedly occurred to varying
degrees in most other industrialised countries, but in Switzerland, notably because
of the seriousness of the recession and the difficulties caused by the currency's
appreciation, it seems to have been particularly pronounced. The paragraphs
that follow give a brief description of these different structural changes.
The shift in demographic trends
Between 1970 and 1974, the resident population had been growing at a
relatively slow rate of about 0.7 per cent a year, but 1975 brought a sharp break
in the trend.
Since then, the total population has been falling as foreign workers
and their families have left the country.
The growth pattern between 1970 and
1974 reflected the continuing rapid increase in the foreign population plus the
markedly slower growth of the Swiss population.
The very moderate growth in the
Swiss population, which is continuing, is probably due essentially to the lengthen¬
ing of the average lifespan.
This phenomenon of aging and contraction observable
in the total population is, of course, reflected, and to a greater degree, in the
labour force, which has been declining since 1973.
In fact, the growth of the
resident population had already begun to slow considerably in the mid-sixties
(see table 14) as the result of a break with previous immigration policy.
It was
in 196319 that measures were first taken to reduce the inflow of foreign workers,
but not until 1970 did the immigration curbs become really rigorous, with the
introduction of a quota for the total number of new permits issued each year.
However, the economic consequences of this new policy did not begin to make
themselves fully felt until the end of 1973 when the boom phase came to an end.
Table 14
Medium-term trend in resident population
Percentage annual average rate of growth
Swiss
population
Foreign
population
Total
1960-1965
0.8
10.2
1965-1970
0.6
3.9
1.1
1970-1974
0.4
2.1
0.7
1974-1977
0.3
-3.6
-0.4
Source: Swiss submission to the
1.9
OECD.
The decline in the resident population, and particularly the steep fall in
the foreign population by about 10 per cent between 1974 and 1977, was
initially caused by the recession and subsequently had a marked contractive effect
on domestic demand.
All sectors of demand were affected, but some more than
others.
Where households' consumption was concerned, the items hardest hit were
clothing and household maintenance, the latter, of course, suffering from the very
sharp downturn in the construction sector, where departures of foreign workers
had a particularly heavy impact.
Requirements in respect of housing and all
19
Under the regulations introduced at that time, permits could no longer be issued
to foreign workers coming to Switzerland in search of employment.
Only those workers
who had already been hired by a Swiss firm before entering the country could obtain a stay
permit.
Furthermore, each firm was required to reduce the number of foreign workers
(subject to police control) whom it employed.
34
OECD Economic Surveys
the related infrastructures fell steeply.
Admittedly, since 1970, demand in that
sector had been stimulated by speculative expectations linked with rising inflation¬
ary pressures: the number of dwellings built each year from 1970 to 1973 was
approximately 80 000, whereas the Swiss experts estimated real requirements at
only about 45 000.
But the tightening of the immigration curbs as from 1970,
followed by the world recession, the departure of foreign workers, and the virtual
elimination of inflation caused a sharp fall in demand in the construction sector.
Whereas from 1970 to 1973 growth of construction activity averaged 7.3 per cent
a year, in the period from 1974 to 1977 it fell to
6.2 per cent.
It should be
noted, however, that this overall decline was also due to the crisis that hit industrial
construction.
As a result, the ratio of gross fixed investment in construction
to GNP (at 1970 prices), which had risen from 16.5 per cent in 1970 to 18.4 per
cent in 1973, fell back to 14.8 per cent in 1977.
Increased dependence on abroad
The Swiss economy, in common with most of the smaller developed Member
countries, has always been very open to external transactions, as regards both
purchases and sales.
The degree of these countries' dependence on abroad, which
can be measured by the ratio of exports or imports of goods and services to gross
domestic product, has increased since 1 970.
But the trend has not been uniform,
and there have been marked differences between
countries.
Switzerland's case
has been particularly remarkable, however.
The period up to 1973 saw an
extremely rapid expansion of trade, particularly within the European Economic
Community. Certain Community countries like Belgium and the Netherlands
achieved a considerable increase in their export shares; in Switzerland the increase
was much more moderate.
In 1973, the degree of Switzerland's dependence as
regards exports (35.3 per cent) was a good deal lower than that of the comparable
countries as a whole (41 .8 per cent).
But whereas from 1974 to 1977 the increase
in the share of exports in production slowed down to lower than 0.5 per cent in
the group of countries concerned, Switzerland's export share rose during the
same period from 35.3 to 42.3 per cent, which brought it up to the average level
for the comparable countries.
The increase in Switzerland's relative and absolute dependence on abroad is
the result of two convergent movements.
From 1974 to 1977, the average annual
volume growth of Swiss exports was more than one point above that recorded in
comparable countries, unlike what had occurred in the preceding period when
it was more than 3 points below.
This change of trend reflected the strength
of exports despite a significant appreciation in the real effective exchange rate of
the Swiss
franc.
The downturn
in
volume GDP
due
to
the fall
in
domestic
demand also contributed to an increase in the degree of external dependence,
whereas in the other comparable countries collectively, volume GDP grew by
2 per cent a year on average.
In none of those countries was there any fall in
the gross domestic product aggregate for the whole period. Because of this
sharply increased dependence on external transactions, Switzerland became a good
deal more vulnerable to international developments. No statistics are available
on the origin of value added which would show the degree of dependence of the
different industries.
However, from partial data it would appear that the output
of some industries is almost entirely exported20 and that, even apart from these
extreme cases, certain major industries like machine tools, textiles and chemicals
20
In 1975, the dyestuffs, watchmaking and pharmaceuticals industries exported nearly
90 per cent of their output.
Table 15
Degree of external dependence of Switzerland1
Per cent
Exports of goods and services
Imports of foods and services
GDP
GDP
In per cent
1970
1973
1977
1970
Average annual rate of growth
Exports
1973
1977
1973/1970
Imports
1977/1973
1973/1970
GI5P
1977/1973
1973/1970
1977/1973
Austria
31.4
35.1
36.5
31.1
37.2
41.3
9.8
3.7
12.3
5.4
5.8
Belgium
43.9
50.3
51.0
41.6
48.4
50.5
10.2
1.7
10.7
2.5
5.3
1.4
Denmark
29.6
33.6
35.4
32.4
36.6
37.8
8.1
2.2
7.9
1.7
3.6
0.9
2.6
Finland
27.4
28.4
28.6
28.8
28.9
27.0
6.6
1.3
5.5
-0.6
5.3
1.2
Ireland
36.8
38.8
45.7
45.0
51.8
52.4
6.6
6.8
9.7
2.8
4.7
2.5
Norway
41.8
45.6
43.7
43.1
45.4
49.3
7.7
3.6
6.4
6.9
4.6
4.8
Netherlands
47.2
56.9
55.9
49.0
52.8
51.7
11.5
2.1
7.4
2.0
4.7
2.5
Sweden
24.3
29.7
29.1
24.8
25.6
28.7
9.4
0.4
3.3
3.8
2.3
0.9
Total
35.9
41.8
42.1
36.7
40.6
42.3
9.7
2.1
7.8
3.0
4.3
1.9
32.8
35.3
42.3
34.5
37.8
40.9
6.0
3.4
6.7
0.8
3.4
-1.1
13.5
15.0
16.6
13.1
14.5
15.1
8.8
4.7
8.8
3.1
5.1
2.1
Switzerland
Memorandum
item:
OECD Total
1
The results were calculated from data expressed in US dollars at 1970 prices and exchange rates.
Sources: OECD, National Accounts of OECD countries, Secretariat estimates.
36
OECD Economic Surveys
export nearly 80 per cent of their output, which makes it essential for Swiss
industry to adapt structurally to new conditions on international markets.
The Swiss economy's dependence on the import side also increased between
1970 and 1977.
The ratio of imports to gross domestic production at 1970 prices
rose from 34.5 per cent in 1970 to 40.9 per cent in 1977.
This trend ran
parallel, however, with that recorded in the other OECD countries of comparable
economic structure, whose average degree of dependence remained about 2 points
above Switzerland's throughout the period.
The degree of dependence of the
group of countries as a whole grew more rapidly on the import side from 1974
to 1977 than on the export side; only in Switzerland and Ireland was the
reverse
true.
Restructuring and rationalisation of activities
The combined effects of sluggish domestic demand, the slowdown in world
trade growth and keener international competition as a result of the currency's
appreciation have spurred Swiss enterprise to undertake, since 1974, a very
extensive process of restructuring and redeployment of production.
According
to a number of studies or surveys carried out in Switzerland, this has resulted
in increased concentration of firms, rejection of unprofitable lines of production,
and a reorientation toward specialised products and/or lines which have a
high added value and are capital-intensive.
By and large, firms have stepped
up their research efforts and their endeavours to adjust production constantly to
new market requirements.
There also seems to be an increasing tendency to set
up production centres abroad.
It is still too early to assess the quantitative results
of the schemes undertaken; such an assessment would in any case require detailed
studies.
However, it may be noted that in the last two years the volume growth
of merchandise imports and exports has been particularly rapid (see Table 10),
going further than just the effects of a "catch-up" from the 1974-75 downturn
and reflecting increased penetration both by Swiss products on foreign markets
and by foreign products on the Swiss market.
This has been particularly true
of certain industries like textiles and clothing, chemicals, and mechanical and
electrical engineering21.
In the clothing industry, the concentration process has intensified in recent
years, affecting practically all regions.
Since 1966, the number of enterprises has
fallen by more than one-third.
Certain standard items are being manufactured
in ever smaller quantities, domestic requirements being met by increased imports
from developing countries and notably the Far East.
Production of very high
quality items has continued to increase, however, not only to meet domestic
demand but also, and more importantly, demand from the other highly industri¬
alised countries.
In the textile industry the proportion of weaving, dyeing and
knitwear activities has fallen sharply, while that of spinning has increased with
the introduction of highly capital-intensive manufacturing processes.
Further¬
more, some firms in this sector have subcontracted certain particularly costly
21
The cumulative percentage growth rates for 1976 and 1977 in volume imports and
exports for the main industries were the following:
Exports
Imports
Textiles and clothing
27
22.8
Chemicals
19
29
Non-electrical machinery
Electrical machinery
Precision engineering
Clock and watchmaking
4.2
19.5
29.1
8.9
14.8
26.5
30.1
29
Switzerland
37
finishing jobs to foreign workshops, most of them located in Romania, Hungary
and Yugoslavia.
In the footwear industry, Swiss manufacturers have all but given up making
women's items, concentrating instead on luxury products in short runs and of
high quality (sports shoes, ski boots). In mechanical engineering, more use is
being made of electronic processes for manufacturing capital goods and there is
an increasing incorporation of electronic components in the products. The manu¬
facture of very specialised and highly sophisticated machines, causing foreign sales
to be directed to the highly industrialised countries, means, however, forgoing the
markets of the non-oil developing countries to some extent.
In this sector, Swiss
enterprises have been co-operating more closely with each other and they have
also been looking for partners abroad.
In the chemicals industry, a main devel¬
opment has been a shortening of the range of products for dyestuffs and concen¬
tration instead on chemical elements and compounds, as well as medicinal products
and pharmaceuticals; new manufacturing processes have also been introduced.
In the clock and watchmaking industry, the restructuring that has taken place
over the last ten years has resulted in intensive concentration, with a cutback in
the workforce from 85 000 to about 50 000. But there has been no major change
in product variety: many different sizes, types and models have been kept, on the
reasoning that a very wide choice was preferable to excessive specialisation.
Exports have tended to be concentrated in clock and watch movements, however,
assembly of the finished products being carried out increasingly in the Far East.
The watchmaking industry is experiencing difficulties owing to the emergence
of new competitors and the inroads into the world market being made by electronic
watches, but the problems seem to have much less to do with production tech¬
niques than with warehousing, inventory control and sales policy.
The prospects
are that the restructuring process will go on and that production will continue
to concentrate in the years ahead on medium- and high-quality range mechanical
watches and on analog quartz watches (conventional dials) rather than digital
quartz watches22.
The construction sector, which has been particularly hard hit by the
recession, does not seem yet to have adapted its structures to the new and distinctly
less favourable growth conditions for the medium-term.
It is still excessively
fragmented and a number of businesses suffer from a lack of specialisation.
The
fall in domestic demand has nevertheless caused an increasing number of firms
to turn to foreign markets, particularly in the steel construction sector.
But the
engineering contracting companies and engineering consulting firms have also been
tending more and more to take on construction projects abroad.
The largest
building contractors, moreover, have actually set up outside Switzerland.
Taking
industry as a whole, transfer of production capacity abroad, which moreover is
not something new for Switzerland, seems to have accelerated in recent years.
Swiss direct investment in the industrialised countries seems to be concentrated
in the United States and the Federal Republic of Germany, but Switzerland has
also invested in the developing countries so as to benefit from local reserves of raw
materials or cheap labour.
22
The information in this paragraph has been taken from various experts' reports
produced in Switzerland in recent years.
38
OECD Economic Surveys
IV
STANCE OF ECONOMIC POLICY
Demand management policy became distinctly less expansionary in 1977 than
in 1976, chiefly as the result of a change in fiscal policy stance.
The National
Bank continued with an accommodating monetary policy, which made it possible
to meet the credit requirements caused by the revival of activity and did not inter¬
fere with the downward trend in interest rates.
As from the summer of 1977,
however, the authorities' task was made particularly complicated by the upward
pressure on the Swiss franc resulting from the disturbances on the international
exchange markets.
On the whole, fiscal policy had hardly any effect as a stimulant
of demand, which is in contrast with previous years.
In addition, other economic
policy measures have been introduced, or are in preparation, which aim essen¬
tially to strengthen the role of monetary and fiscal policies as demand management
tools.
Monetary policy
The general stance of monetary policy has remained practically unchanged
On the domestic front, the authorities endeavoured in 1977 to
since 1975.
maintain a sufficient degree of liquidity to finance the upturn in activity without
compromising the results achieved in the fight against inflation.
On the external
front, they tried to prevent any undue real appreciation of the Swiss franc
exchange rate which would hamper the growth of exports and consequently of
national production.
The quieter state of the exchange market from mid- 1976
to mid- 1977 made things easier for the monetary authorities, who were able to
concentrate more specifically on domestic problems.
The 5 per cent growth
target set for the money supply (Ml) in 1977 was slightly lower than in the two
previous years (6 per cent), but during the year the National Bank readjusted the
monetary base" in order to try to ensure the liquidity growth it considered
desirable.
In the first quarter of the year, this readjustment was designed to ease
the strain on the money market, either by releasing the banks' minimum reserve
assets, or by giving direct support to the banks (discounting credit and secured
advances) or, as in March 1977, by not renewing "sterilisation rescription"24 that
had matured.
In addition, the National Bank granted considerable short-term
financial support to the banks at the end of April, when liquidity became tighter
because of the increase in the Confederation's holdings with the National Bank
and because of reactions to the announcement of the heavy losses sustained by
a major credit institution.
As from June, developments on the exchange market once again strongly
influenced the conduct of monetary policy.
To neutralise the increase in domestic
liquidity due to heavy purchasing of foreign currencies, notably dollars, by the
National Bank, the latter transacted large Swiss franc/ dollar swaps with the banks,
and on 17th November placed Sw.Frs. 800 million in "sterilisation rescriptions"
23 The adjusted monetary base comprises notes in circulation and domestic holdings in
transfer accounts with the National Bank, excluding the financial support granted by the
latter in the form of discounting credit, secured advances and swaps.
24 These are bills placed on behalf of the Confederation, the proceeds of which are
not used by the latter but put into a blocked account with the National Bank.
Switzerland
39
with the banks.
At the beginning of 1978, the monetary authorities were again
obliged to mop up surplus liquidity resulting from intervention on the exchange
market and, for this purpose, the National Bank again placed "sterilisation
rescriptions" amounting to Sw.Frs. 1.5 billion.
On 28th February 1978, liquidity
"sterilised" with the National Bank totalled Sw.Frs. 3.45 billion.
During the year,
the growth rate of the money supply (Ml) veered several times from the norm
set by the authorities.
Part of the reason for these fluctuations is that the National
Bank manages Ml chiefly through the monetary base and that, apart from the
fact that it tries to avoid drastic adjustments, a number of factors have a direct
influence on the money multiplier, which expresses the relationship between the
money supply (Ml) and the monetary base.
However, during 1977 the monetary
base increased by 4.8 per cent and the money supply (Ml) by 4.1 per cent, this
being relatively close to the target set by the authorities.
Table 16
Financial support granted by the Swiss National Bank1
SF billion
1976
1977
January
0.00
1.27
February
0.26
1.68
March
4.54
5.00
April
1.11
2.33
May
1.14
1.73
June
3.88
5.04
July
0.71
1.31
August
1.17
1.63
September
5.57
3.50
October
1.24
1.07
November
1.41
2.20
December
8.06
4.68
1
Increase in the credit granted by the Central Bank during the week preceding the payment date,
plus swaps connected with the payment date, plus "sterilisation" rescriptions of the Confederation which the
Bank has repurchased temporarily.
Source: Swiss submission to the
OECD.
Bank credit granted to residents by the 71 largest banks25 showed a slightly
higher rate of increase.
Whereas in 1976 it had risen by only 6.2 per cent, in
1977 the credit lines opened by the banks since 1975 were heavily drawn on,
and at the end of the year outstandings were nearly 9 per cent above the level
at end 1976.
The policy of alleviating the financial charges of export-oriented
firms was expanded and renewed in 1977 and early 1978 to run until October
of this year.
The agreement between the National Bank and the Swiss association
of bankers to give financing facilities to exporting firms in the watchmaking, textile
and footwear industries26 was extended to cover export-oriented firms in other
industries experiencing financial difficulties, but this preferential financing applies
only to actual export transactions.
In 1976, the National Bank and the banks
also extended until 1st August 1979 the agreement under which the banks forgo
25
The 71
banks with assets of over Sw.Frs 100 million.
26 Under this agreement, which dates from August 1975, the banks discount bills of
exchange issued by firms in the three industries concerned at a rate not more than 2.5 per
cent over the official discount rate.
The National Bank undertakes to rediscount these bills
at a rate at least 1 per cent below the official rate and outside the authorised bank ceilings.
Table 17
Monetary variables
Dec.
Dec.
Dec.
1973
1974
1975
1976
March
June
1977
Sept.
Dec.
March
June
Sept.
Dec.
Changes in outstandings from corresponding period of previous year, end of period, SF million
Not seasonally adjusted
Monetary base
639
2 670
1807
1047
2 092
1824
1836
1316
1393
1595
1558
1768
-635
2 353
1749
4 357
1771
2 648
1 198
-2 119
1454
3 979
92
-88
-13
37
62
60
324
569
544
495
2 316
-303
225
199
3 162
2316
961
1891
-2 804
-4418
-155
-914
-2 501
-3 171
-3 188
-1 167
1052
2 401
-1502
Foreign assets
Holdings of securities
Refinancing credits
0
-557
Other
-572
897
Percentage changes from corresponding period of previous year, end of period
Monetary base
Money supply (Ml)
Money supply (M2)
Money supply (M3)
2.5
10.1
6.2
3.9
7.9
7.0
5.9
4.7
4.8
5.7
4.8
2.1
1.1
5.9
6.7
9.6
8.6
8.1
7.0
3.5
4.5
4.1
5.9
7.8
0.7
2.2
3.1
1.7
3.0
7.1
7.4
4.8
7.6
6.0
7.9
8.5
9.0
7.5
8.3
10.0
9.3
7.5
Bank credit to residents1
8.2
7.4
4.3
5.8
6.6
6.5
8.2
10.0
9.6
9.1
5.2
8
hi
S
a
Annual rate of growth during quarter
1
rS"
Seasonally adjusted
Monetary base
Money supply (Ml)
1
71 banks with assets of over SF 100 million.
Sources: Swiss National Bank, Monthly Bulletin; Secretariat estimates.
to
c
3
Switzerland
41
adjusting their discount rates for export credit bills amounting to at least Sw.Frs.
10 million and of a duration of at least three years, while the National Bank for
its part undertakes to rediscount these credits.
The downward trend in interest rates which began in 1975 continued during
the period under review.
This development, made possible by money market
conditions, was essentially a response to movements in the exchange rate, parti¬
cularly at the beginning of 1978.
The official discount rate and the rate for
advances against collateral were lowered a half-point in July 1977 and then again
on 27th February 1978, which brought them to 1 and 2 per cent respectively,
the lowest rates ever in Switzerland. Bank deposit rates, as a whole, followed
a trend parallel to that of the official rates: the rate on cash certificates issued
by the major banks and the rate on three-month deposits fell by about a half-point
between January 1977 and January 1978.
Lending rates also continued to ease:
mortgage rates edged down steadily and the gap between rates on new and old
mortgages has now disappeared.
Interest rates apart, the machinery for curbing inflows or encouraging out¬
flows of foreign funds has undergone a number of adjustments.
In the first half
of 1977, when the exchange market settled down, the controls were relaxed
somewhat. In April, the regulations applying to foreign banks' deposits with
Swiss banks were eased: the ceiling for exemption from the 10 per cent quarterly
commission charged on foreign deposits made since 31st October 1974 was
increased from Sw.Frs. 100 000 to Sw.Frs. 250 00027; and in May, the ban on
imports of bank notes in amounts exceeding the equivalent of Sw.Frs. 20 000 per
person per quarter, which had been in force since 14th April 1976, was lifted.
In September 1977, the upward pressures on the Swiss franc caused the
authorities to stiffen the regulations again and they withdrew authorisation for
forward sales of Swiss francs to non-residents, although this measure applied only
to contracts for under 1 month.
In November, the National Bank also modified
the regulations concerning capital exports subject to authorisation.
Under the
amended regulations, foreign borrowers are no longer authorised to arrange
advance repayments for new "note" issues. Furthermore, the National Bank
stated that it was prepared to authorize borrowers to cover themselves, with a
view to repaying authorised exports of capital, by forward purchases of Swiss
francs at three months at most, even if that resulted in an overrun of the ceilings
on banks' sales of Swiss francs to non-residents.
But it was in February 1978
that the controls were considerably tightened in an attempt to check the very
steep appreciation of the Swiss franc on the exchange market.
In addition to
lowering the official discount rate, as mentioned earlier the National Bank and
the Federal Council took further steps to discourage inflows of foreign funds.
Foreign assets deposited with banks established in Switzerland, which had been
exempt from the negative interest of 10 per cent per quarter up to their amount
as at 31st October 1974, are now exempt only as to that amount reduced by
20 per cent, but which must not be less than Sw.Frs. 1 million. Deposits in
excess of Sw.Frs. 5 million receive no exemption.
In addition, the Federal
Council and the National Bank took the following measures:
forward sales of Swiss francs to non-residents under contracts for less
than 10 days are again subject to a ceiling of 20 per cent of their amount
at end-October 1974; all other contracts are limited to 40 per cent of
their amount at 31st October 1974;
27
If the deposit did not exceed Sw.Frs. 150 000 at 31st October 1974, any further
increase was exempt from the commission charge.
OECD Economic Surveys
42
Diagram 7
Percent
Intereit rates
Selected interest rates
14
Percenl
14
l
Euro-dollar (3-month)
A
12
/
12
10
10
t
Official discount rate
\
6
Call rate (two days)
Call rate (one day)
4
ftixN
2
\/
\
Swiss Euro-franc (3-month)
2
0
Per cent
10
Percent
,
..
.
Lending rates
10
Overdrafts with major commercial banks
j4
/
New mortgage loans
(dwellings and industrial buildings)
Par cent
Percent
10
10
Hates on deposits
rjaSh certificates
(5 major banks)
8
I
8
.
- (
4
Savings deposits with cantonal banks
2
i
2
3-month deposits with major banks
0
Percent
Percent
10
.
10
Long-term rates
Cantonal bond yield
7
Euro-bond yield
8
6
Confederation bond yield
«ara*».
_
4
\
2
Share yield
0
1974
1
1975
Break in series; 2-day money rate from
1976
January, 1977.
Sources: La Vie économique; Swiss National Bank, Monthly Bulletin; OECD, Financial
Statistics; and Morgan Guaranty Trust Co., World, Financial Markets.
1977
1971
43
Switzerland
Diagram 8
Monetary variables
Monetary base and money supply (M1)
32
32
Percentage change from previous year
28
28
24
24
Monetary base
20
20
16
16
12
I
\
8
\
12
\
/
/\
/
8
4
4
0
0
Money supply (Ml)
_
Ratio of currency to the money supply (M1)
46
42
Trend covering the period 1955 Ql - 1977 Q3
34
T
30
-
43.11 - 0.0937 l
-
percent
Money supply (M2)
Percentage change from previous year
16
12
In real terms m
1960
1
1965
Deflated by dividing by consumer price index.
Sources: Swiss National Bank; Secretariat estimates.
1970
1975
44
OECD Economic Surveys
imports of foreign banknotes are again restricted to the equivalent of
Sw.Frs. 20 000 per person per quarter;
purchases of Swiss securities (shares, bonds, investment trust shares) are
now prohibited to non-residents28;
the National Bank may effect forward foreign exchange transactions at
up to 24 months for reasons of exchange rate policy, instead of three
months as formerly, which has given it the possibility of influencing
medium-term interest rates on the Eurofranc market;
the negative interest on deposits by foreign banks and private individuals
is now extended to Swiss franc assets held by foreign central banks;
the banks must now cover their total foreign exchange liabilities with
foreign currency assets instead of maintaining their foreign exchange
position in balance in respect of each currency.
The tone of the capital market was hesitant during the first half of 1977.
Investors were cautious, with the result that there was difficulty in placing certain
loan issues by the Confederation of the Cantons.
relatively wide fluctuations in
This period, notably, saw
demand from institutional
investors.
For the
first half-year as a whole, Swiss public loan issues totalled Sw.Frs. 2.4 billion
compared with Sw.Frs. 4.1 billion in the first half of 1976.
Foreign public loan
issues, on the other hand, showed virtually no change from the first half of the
previous year.
From June onwards, the market eased appreciably and this was
reflected in the trend of interest rates.
The yield on Federal bonds, after
fluctuating on either side of a slight upward trend in the first half of the year,
declined steadily from an average rate of 4i per cent in June 1977 to 3d per cent
in January 1978.
fell from Sw.Frs.
The total amount of public loan issues, excluding conversions,
10.5 billion in
1976 to Sw.Frs.
8.6 billion in
1977.
The net
amount of money raised through foreign loan issues accounted for 42.8 per cent
of that total in 1977, compared with 32.5 per cent in 1976.
Fiscal policy
Whereas in 1976 fiscal policy imparted a considerable stimulus to domestic
demand, last year its impact was much weaker.
The initial Confederation budget
for 1977 provided for a moderate growth of nominal expenditure, as compared
with both the previous year's initial budget and its outturn, and a deficit of the
order of Sw.Frs. 1.8 billion.
The outturns for 1977 show that nominal expen¬
diture was down by nearly 2.5 per cent and that the budget deficit was less than
Sw.Frs. 1.5 billion (1 per cent of GNP).
Given the marked slowdown in volume
28
The ban on the purchase of Swiss portfolio securities by non-residents allows for
a number of exceptions:
in the case of increase of share capital, non-residents are authorised to exercise their
subscription rights attaching to the share of capital they held previously;
subcriptions for shares in Swiss investment funds, at least 80 per cent of whose
assets are invested abroad, is exempt from the ban.
Other exceptions are allowed subject to authorisation from the National Bank, notably:
subscription for shares in Swiss holding companies at least 80 per cent of whose
assets are invested abroad;
subscriptions for loans issued in Switzerland of which the proceeds are converted into
foreign currencies and used abroad;
subscription and purchase of shares serving for the creation or enlargement of an
establishment in Switzerland or for acquisition of a major holding in such an
establishment.
45
Switzerland
growth of expenditure compared with 1976 and a deficit of much the same order,
the demand impact of the Confederation budget was practically nil in 1977. From
the estimates of the outturns on the budgets of the Cantons and Communes, these
appear to have imparted much less of a stimulus than initially foreseen, since
expenditure showed no change in nominal terms and revenue increased by 1.3 per
cent, with the result that the deficit on these budgets was halved by comparison
with the previous year.
In all, expenditure on general government consolidated
account probably remained unchanged in 1977 while revenue rose by about 0.3 per
cent, the result being a slight reduction in the public sector deficit to about 1.4 per
cent of GNP as against an initial forecast of 2.5 per cent.
Social security trans¬
actions, which are of a special nature in Switzerland from the institutional point
of view, showed annual surpluses between 1971 and 1974 ranging between
Sw.Frs. 1 and 1.5 billion.
In 1975 and 1976, net savings on social security fell
by some 50 per cent, mainly as a result of the very rapid growth of expenditure
due to the recession; on the other hand, the upswing of economic activity in 1977
should have had a positive effect on savings.
The rejection by referendum on 12th June 1977 of the Federal order of
17th December 1976, which aimed to replace turnover tax by value added tax,
somewhat changed the course of fiscal policy.
As far as the Federal authorities
were concerned, the proposed tax reform was to have enabled public finance
to be brought back into equilibrium in 1979, while allowing a 4 per cent annual
growth of expenditure up until then.
The Confederation budget for 1978 is
therefore now placed in a different perspective from that envisaged by the
authorities prior to the tax reform's rejection. Maintenance of expenditure at
the level initially foreseen would have resulted in a deficit of more than Sw.Frs.
2 billion, which the Federal Council considered excessive.
Consequently, growth
of expenditure on Confederation account in 1978 has been scaled down to 1.1 per
cent over the 1977 budget.
Consumption expenditure is up slightly (0.6 per cent),
chiefly because of higher wages and salaries29, whilst investment expenditure is
down 6.6 per cent in nominal terms, following a reduction of 24.5 per cent
in 1977.
Transfer expenditure is budgeted to show an increase of only 1 per
cent in 1978.
In marked contrast with previous years, debt servicing expenditure
should show virtually no change in 1978, either in absolute value or as a per¬
centage of total expenditure (about 5 per cent).
A look at the trend of
expenditure by economic function30 shows that the 1978 budget does not provide
29
The number of personnel employed by the Confederation has been frozen
since
1975 at a maximum establishment of 32 775.
30
Trend in expenditure on Confederation account by category:
Percen-
Annual ST°wth
tage
Average
Shi^7nn
1970
\V%
19 lb
budget
]977
197g
Percen¬
1978
tage
Bud«et
Budeet
Bud8et
Shi07«in
(_\
(la
(_
1978
W
(C)
budget
8
7
20.0
Social security
17.0
17.7
Defence
25.9
8.3
1.2
9.6
Communications
16.2
14.8
2.9
16.8
1.7
5.0
9.8
1.6
11.0
3.6
Education, and research
Agriculture
External
relations
General administration, other
Total
a)
b)
c)
4.2
(b)
8.5
15.1
0.8
10.0
10.9
2.6
4.1
7.9
18.3
15.6
3.8
1.4
7.1
21.3
100.0
12.6
0.8
0.5
4.4
100.0
compared with 1976 outturn.
compared with initial budget for 1977.
compared with 1977 outturn.
13
8.9
46
OECD Economic Surveys
for any significant increase on the previous year other than in the case of social
security expenditure, which is up by 8 per cent. If expenditures budgeted for
1978 are compared with the actual outturns for 1977 instead of the initial budget
forecasts for that year, the stimulus imparted to demand by the Confederation
budget is slightly greater than mentioned earlier.
Given the fact that, in 1977,
expenditure fell short of the initial forecast, and assuming this will not occur in
1978, expenditure might in fact increase this year by 4.4 per cent in nominal terms.
Whereas the revenue entered in the 1 977 budget was less than in the previous
year, revenue is budgeted to increase by 5.2 per cent in 1978, on the technical
assumption of an approximately 4 per cent growth of nominal GNP.
The increase
in revenue should derive essentially from a relatively steep rise in the proceeds
from income and wealth taxes (8.3 per cent) and notably the national defence tax.
The new measures should produce a very steep increase in stamp duties, but these
still account for a very small share of total tax revenue31.
Revenue from the
anticipatory tax32 might grow by 6.3 per cent in 1978: a relatively moderate
increase because the rise in dividends and bank deposits would be offset to some
extent by lower interest rates.
Revenue from consumption taxes should show
only a very small increase on 1977, chiefly because of an unchanged yield from
turnover tax which continues to be affected by the hesitant business climate.
In all, the Confederation budget shows a shortfall of Sw.Frs. 1.2 billion.
This
deficit, which is Sw.Frs. 550 smaller than in 1977, represents a little more than
0.7 per cent of GNP.
Here again, comparison of the 1978 budget with the 1977
outturns gives somewhat different results, since revenue would increase by
6.6 instead of 5.1 per cent and the budget deficit would be reduced by only about
Sw.Frs. 250 million.
Depending on which basis of comparison is used, therefore,
assessments must differ slightly as to the foreseeable economic impact of the 1978
budget, which initially seemed likely to have a restrictive effect on demand but,
when compared with the outturns for 1977, will probably have a more neutral
influence.
Notably because of the maintenance of a very tight policy for personnel
recruitment, expenditure on the Cantonal and Communal accounts is budgeted
to show only a very small increase by comparison with the initial budget for
1977 (0.9 per cent) and a slightly larger one as compared with the outturns for
that year (3.2 per cent).
Revenue was budgeted at 1.8 per cent over the 1977
budget, which was supposed to reduce the deficit from Sw.Frs. 2 billion in 1977
to Sw.Frs. 1.7 billion in 1978.
However, since revenue growth in 1977 was
more rapid than foreseen, the 1978 budget forecast corresponds to the 1977
outturn.
Total expenditure on general government consolidated account should
show an increase of nearly 4.5 per cent in nominal terms over the 1977 outturn
and revenue a growth of about 2.5 per cent.
The shortfall on general government
consolidated account, which probably represented about 1.4 per cent of GNP in
1977, should widen to 1.8 per cent.
Thus, given that total expenditure on consol¬
idated account was less than budgeted in 1977 and total revenue more, the demand
impact of public expenditure might be slightly positive in 1978.
Financing of the public sector's requirements posed no special difficulties
in 1977, given that the capital market was very absorbent.
Thus, the average
yield on Confederation bonds fell from 5.12 to 3.78 per cent and the yield on
Cantonal bonds from 5.44 to 4.44 per cent between June 1976 and December
1977.
Furthermore, the Confederation had already taken advantage of the fall
31
It is estimated that the 50 per cent increase in stamp duty on issues and negotiations
of securities as of 1st April 1978 might bring in Sw.Frs. 110 million in additional revenue.
32
This is a 35 per cent refundable tax deducted at the source on income from securities,
winnings from lotteries and insurance benefits.
47
Switzerland
Table 18
Budgets of central government and local authorities
SF million and percentages
Initial forecasts
Outturns
1977
1976
1978'
19771
Federal budget:
Expenditure
15 860
15 493
17.1
-2.4
14 287
14 026
16.8
-18
-1573
-1467
Per cent change
Revenue
Per cent change
Balance
15 9911
(1.1)' (4.4)'
14 223
14 956
(-1.8)'(-0.4)'
(5.1)' (6.6)'
-1768
-1212
300
1700
Estimated demand effect on economy
16 1681
(0.2)' (0.8)'
Cantonal and communal budgets:
Expenditure
Per cent change
33 912
33 900
5.6
0.0
Revenue
32 876
33 300
6.8
1.3
-1280
-600
41 122
41 100
8.0
-0.1
38 922
39 033
8.7
0.3
-2 200
-1.5
Per cent change
Balance
34 700
35 000
(0.0)" (2.3)*
(0.9)" (3.2)'
33 300
32 700
(0.6)' (-0.5)'
(1.8)" (0.0)'
-2 000
-1700
General government
(consolidated accounts)1
Expenditure
Per cent change
Revenue
Per cent change
Balance
As a percentage of GNP
a)
b)
42 400
42 900
(2.4)' (3.1)»
(1.2)° (4.4)'
38 632
39 998
(1.7)' (-0.7)"
(3.5)° (2.5)'
-2 067
-3 768
-2912
-1.4
-2.5
-1.8
Per cent change from initial forecasts.
Per cent change from outturns.
1
Including the expenditure entailed by the measures to provide employment (1977:
SF
120 million;
1978: SF 137 million).
2
Excluding social security.
Source: Swiss submission to the OECD.
in interest rates and the sluggishness of the capital market to borrow large sums
in 1976, so that it was able to create reserves of the order of Sw.Frs. 2.5 billion
with the National Bank.
In 1978, it should be possible to cover the borrowing
requirements of the local authorities without any particular difficulty, mainly
because these have been reduced.
However, the rejection of the proposed reform of the tax system still leaves
unanswered the problem of the medium-term trend of fiscal resources.
The
slowness of tax revenue growth33 due to the popular refusal to endorse the reform,
coupled
with
the
authorities'
desire
to
eliminate
the
federal
finance
deficit
in the medium-term, is causing a rigidity in fiscal policy that constitutes a constraint
at a time when inflation is virtually non-existent and there is still some slack in
the economy.
Although providing for a return to budget equilibrium in 1981,
the new financial plan drawn up by the Federal Council following the rejection
of the first proposal last June should introduce some flexibility into fiscal policy.
The more moderate trend in expenditure can be expected to continue, notably
with a more effective sharing of tasks with the Cantons, but it is still planned to
introduce a value added tax.
The rate would be lower, however, than in the
first proposal (8 instead of 10 per cent for the standard rate). The replacement
of turnover tax by VAT would bring the number of taxpayers up from about
33
The upturn in activity in 1977 will not bring a corresponding increase in tax revenue
until 1979 or 1980, owing to the lag in receipts from income and wealth taxes, which is from
two to three years.
OECD Economic Surveys
48
Table 19
Central government budget, economic classification
Percentage change from previous year
Outturns
1975
Total expenditure
Public consumption
Investment1
Other
Total revenue
Tax
revenue
Income
and wealth
taxes*
Taxes on consumption'*
Other revenue
Balance, SF million
As a percentage of GNP
Initial
1976
forecasts
1977
1978
3.7
17.1
0.2
1.1
6.1
12.3
-1.8
0.6
-0.3
9.0
-24.5
-6.6
4.2
23.2
11.6
3.5
1.8
16.8
-1.8
5.2
1.0
16.7
-1.9
4.8
-0.2
39.8
-2.8
8.3
1.7
3.7
-1.3
2.3
9.8
17.7
-0.6
9.6
- 1 309
- 1573
-1768
-1212
-0.9
-1.1
-1.2
-0.8
1
Investment expenditure comprises Investment by the Confederation, contributions to public authorities'
investment, contributions to investment by the Federal Railways (CFF), loans and acquisition of holdings in
Switzerland.
2
3
service,
4
Mainly transfers.
Income and wealth taxes include the national defence tax, the tax for exemption from military
the anticipatory tax (on income from Swiss securities) and stamp duties.
Taxes on consumption include turnover tax, special taxes on consumption, customs duties, and import
taxes and charges.
Source: Budget de la Confederation.
92 000 to 135 000, which, coupled with the rise in rates, would appreciably
increase the yield from indirect taxation. On the other hand, it is planned to
reduce direct federal tax on medium and low incomes.
Other economic policy measures
The authorities have introduced
a number of measures intended to
make
demand management policy more effective. Thus, the adoption of a programme
of government construction and equipment from industry and small businesses
for the years 1977-198031 should regulate the impact of public expenditure on
economic activity.
In the field of monetary policy, it is proposed to introduce
legislation to include, in ordinary law, measures actually existing in emergency
law, notably the minimum reserves against assets of banks and the control on
foreign capital inflows, but not for restricted credit. Legislation is also planned
which would enable the Confederation to compel firms to create crisis reserves35.
Among other measures, the transitional scheme for compulsory unemployment
insurance, which was approved by the Federal Chambers in October 1976, entered
into force on 1st April 1977.
In addition, the maximum duration of full com¬
pensation for elderly workers and handicapped persons was increased from 150
to 1 80 days.
34
For the years
1977-1980, the public works programme was budgeted at Sw.Frs.
63 billion. Technical preparation of 44 per cent of the projects has been completed, and
financing of one-third of the programme is now assured.
Furthermore, a programme of orders
from industry for Sw.Frs. 23 billion has now been drawn up.
35 These reserves were instituted by a Federal Law of 1951, which stipulated that
enterprises which created them voluntarily would be entitled to a tax refund, if they assigned
them to certain investments when the Federal Council had decided to release them in order
to combat a recession.
These reserves were in fact released as from
1975.
Switzerland
V
49
SHORT-TERM OUTLOOK AND ECONOMIC POLICY ISSUES
Forecasts for 1978
The relatively rapid growth of activity in 1977 seems likely gradually to lose
momentum in 1978, a number of advance indications of this slowdown having
been apparent already at the end of 1977, notably in the construction sector and
with regard to the inflow of new orders. The recent substantial appreciation of
the Swiss France could well lead to a marked slackening in the growth of exports
and a deterioration in expectations which could affect the investment climate.
In
view of the present thrust of economic policy, domestic demand can hardly be
expected to impart further impetus to activity.
Judging from the objectives
announced by the authorities, monetary policy will probably not play a restrictive
role in 1978, bearing in mind the easy liquidity situation and the significant decline
in interest rates
though this has not yet totally worked through to real longterm rates. However, as a result of the austerity imposed with regard to public
finance, general government transactions will impart only a slight stimulus to the
economy. In all, the growth of real GNP can be expected to be very modest in
1978. Given the positive carryover at the start of the year, it could grow by
some 1 .5 per cent as an annual average.
In this case, employment could at best
level off, but in view of the population trends, unemployment will probably remain
at an extremely low level.
Because of the favourable effect of the appreciation
of the Franc on domestic costs, and the continuing weak pressure of demand,
prices and earnings are likely to rise only very slightly.
If the economic situation
develops in line with these forecasts, the surplus on current account could grow
even larger.
Consumers' intentions surveys carried out at the end of 1977 showed that
households were still inclined to increase their expenditure.
However, in view
of the expected trend of real disposable income, the growth of private consumption
in real terms will probably be relatively moderate (of the order of 2 per cent).
Nominal earnings may rise by some 3 per cent on average, but employment should
vary very little.
Social transfers will, on the other hand, accelerate substantially
(8 per cent) while tax pressure should not increase.
Since, however, there was
probably a relatively pronounced fall in the savings ratio in 1977, combined with
a renewal of the stock of durable goods, any further downturn seems unlikely.
Gross fixed asset formation will very probably remain flat as a result, in
particular, of the renewed weakness of demand in the construction sector.
After
showing a considerable upturn during the first half of 1977, housing starts fell
again substantially in the second half of the year.
In view of the unfavourable
demographic trends, the relatively large stock of unoccupied dwellings and the
small increase expected in households' real incomes, residential construction will
probably decline slightly despite the drop in mortgage rates.
It is unlikely that
the hoped-for development of housing renovation and large-scale maintenance
schemes will entirely offset the fall in demand for new housing.
Despite the
postponement, or completion in 1978, of a number of operations initially pro¬
grammed for 1977, the volume of public works activity is likely to decrease.
Judging by the number of construction and enlargement projects valued at the end
of 1977 by Federal works inspectors, the volume of business and industrial
construction could also show a downward trend.
In all, on a year-to-year basis,
demand in the construction sector could fall by some 2 per cent in volume in 1978.
OECD Economic Surveys
50
Table 20
Prospects for 1978
Percentage changes by volume at 1970 prices
1976'
Private consumption
Public consumption
Fixed
investment
Construction
Machinery and equipment
Final
domestic demand
Change
Change
GDP at
GNP at
in stocks*
in foreign balance*
market prices
market prices
Memorandum
1977=
1978»
1978*
0.5
2.5
2.5
4.0
1.0
1.0
1
-10.7
3.0
0.4
-i
2
-8.6
2.0
-2.0
-2
-14.6
5.0
5.0
2
-2.0
2.4
1.8
li
0.7
1.2
0.0
-0.7
0.4
-2.1
4.0
1.7
li
-1.3
4.3
2.0
H
-0.1
i
-i
items:
Exports of goods
11.3
11.8
6.0
Si
Imports of goods
13.3
10.1
6.0
6}
2.3
0.5
1.8
13
2.3
1.5
1.5
H
GNP implicit price deflator
Private consumption implicit price deflator
1
Provisional.
2
Official estimates.
3
Official forecasts (by Federal Administration's economic forecasting group).
4
Secretariat forecasts.
5
Changes expressed as a percentage of GDP in the previous period.
Sources: Swiss submission to the OECD and Secretariat estimates.
The substantial reconstitution of profits in 1977, and the drop in financial
charges as a result of the decline in interest rates, should have a favourable impact
on investment in plant and machinery; however, considerable uncertainty surrounds
the foreseeable trend of capital expenditure.
Capacity utilisation rates are still
relatively low and the recent appreciation of the Franc, combined with shortening
order books, would seem to have caused a reversal of expectations not only in
the export industries but also in enterprises working mainly for the domestic
market.
It is true that the increased pressure of international competition due
to the exchange rate appreciation will act as a further incentive to seek productivity
gains through early replacement of capital equipment which has become tech¬
nically obsolete.
While capacity is unlikely to be increased, it is nevertheless
probable that enterprises will continue the rationalisation efforts undertaken in the
context of the major programmes now underway aimed at restructuring the pro¬
duction apparatus.
Overall, according to the Forecasting Group of the Federal
Government, the volume of investment in plant and machinery should grow by
approximately 5 per cent, whereas the Secretariat foresees a much more moderate
increase of the order of 2 per cent.
Forecasts concerning stocks are all the more hazardous in that this aggregate
included a major residual error in the statistics for 1977.
It has been assumed
that the fall in aggregate demand would result in an involuntary accumulation
of stocks of finished products.
Despite a probable slowdown in the formation of
stocks of raw materials, and the slower growth of goods in process owing to
the reduced rate of increase in production, total stockbuilding could have a slight
positive impact on the growth of GDP.
The foreseeable slowdown of production is unlikely to cause any significant
change in the situation on the labour market.
Total employment should remain
more or less stable, and there could be a slight reduction in working hours.
In view of demographic trends, and in the absence of any pronounced change
Switzerland
51
in participation rates, the number of wholly unemployed in annual average terms
could be in the region of 15 000, i.e. approximately 0.5 per cent of the labour
force.
This forecast would be consistent with the stabilization of the numbers
of foreign workers. However, because of fairly substantial seasonal variations,
it is not impossible that there will be a temporary upsurge in unemployment
lasting until the spring.
Increases in wages and prices would seem likely to be extremely modest in
1978.
According to the official estimates, civil service wages should increase
by some 2 per cent in nominal terms.
The wage negotiations at the start of the
year suggest, moreover, that the growth of nominal wages in the private sector
could be in the region of 3 per cent, on average, though with wide differences as
between the various branches and enterprises. Even assuming a relatively pro¬
nounced downturn of activity, unit labour costs in industry should, therefore,
increase very little. In view of the favourable effect on import prices of the
Swiss franc's substantial appreciation, the fall in financial charges as a result of
the decline in interest rates and the persisting weak pressure of demand, prices
of manufactures will probably continue to follow the recent trend.
Given that
wages are expected to increase very little, prices of services should also follow
a moderate trend. The existence of a relatively large stock of vacant dwellings
and the continuing fall in mortgage rates should have a restraining influence on
rents. Overall, the year-on-year rise in consumer prices in 1978 could be in
the region of 1.5 per cent.
The strong impetus given to the growth of activity by foreign demand over
the last two years will probably fall off considerably in 1978.
According to the
recent forecasts concerning international trade, Swiss export markets could expand
by about 5 per cent in real terms. Costs and prices will certainly rise considerably
less in Switzerland than in the other Member countries, but the recent substantial
appreciation of the Swiss franc has caused a marked deterioration in price compet¬
itiveness, and it is difficult under these circumstances to envisages Swiss exporters
increasing their market shares again after the development achieved in 1977,
so it has been assumed that they will remain more or less stable. According to
the Secretariat's forecasts, the growth in the volume of merchandise exports can,
therefore, be expected to slow considerably to a year-on-year increase of about
5.5 per cent.
In view of the slackening in aggregate demand, the rate of growth
of imports will probably also decelerate considerably in real terms, particularly
since the rebuilding of stocks of raw materials and semi-manufactures appears to
have come to an end in 1977. However, since the appreciation of the Swiss
franc can be expected to result in increased penetration of the domestic market
by foreign competitors, imports could rise at a slightly faster rate than exports
(approximately 6.5 per cent in volume).
This trend, however, should be more
than offset by an improvement in the terms of trade owing to trends in commodity
prices and the appreciation of the Swiss franc, so that the trade surplus
(fob/fob) could show a slight increase.
The substantial net earnings on current
invisibles could continue to grow, though at a reduced rate, and the overall surplus
on current account could be between Sw.Frs. 8.5 and 9 billion, or, on the tradi¬
tional technical assumption that exchange rates will remain at their present level36,
approximately $4.5 to 5 billion. This surplus would represent about the same
percentage of GNP as in 1977 (in the region of 5.5 per cent).
36
Week of 27th February to 3rd March 1978.
52
OECD Economic Surveys
Economic policy issues
In some respects, the Swiss economy's performance during the last few years
has been remarkable.
Inflation has been
all
but eliminated since
1976,
un¬
employment is of no more than negligible proportions and, in spite of keener
international competition due to the slowdown in world trade growth and the
appreciation of the Swiss franc, the expansion of exports has been astonishing.
The undertaking of extensive structural readjustments and accelerated redeploy¬
ment of production, in an endeavour to offset the effects of the recession and
of the currency's appreciation, seems to have played an important part in the
continuing buoyancy of exports and the parallel increase in imports in the recent
period.
The economic policy options taken by the authorities are largely respon¬
sible for the success achieved on the price front; the implementation of a counterinflationary policy has been made easier not only by the existence of a high degree
of social consensus and of a collective awareness of the dangers of inflation, but
also by the fact that the fall in employment has not caused any substantial increase
in unemployment inside Switzerland, owing to the departures of foreign workers
and the appreciable decline in labour force participation rates.
The interaction
between the currency's appreciation and the changes in prices and wages has also
contributed to the process of absorbing inflationary pressures.
A decrease of nearly 250 000 in the number of foreign workers since 1973
and the obsolescence of part of the nation's capital stock as a result of structural
adjustments have caused a fall in total production capacity from its pre-recession
level.
Consequently, despite the relatively strong recovery in 1977, the level
of activity is still lower than in 1973, a situation without parallel in the other
Member countries.
In these circumstances, the steep increase in imports in 1977
was not enough to bring about any reduction in the large current account surplus.
Admittedly, in the past Switzerland has run a current surplus which reflected its
traditional role as a net exporter of capital, but during the past three years this
surplus has widened very considerably.
This has undoubtedly contributed to
the upward pressure on the Swiss franc, but the magnitude and discontinuous
nature of the appreciation show that other factors have also played an import¬
ant role.
In view of the currency's recent very substantial appreciation and the present
prospects for world trade, foreign demand is likely to provide considerably less
of a stimulus this year.
Since domestic demand growth is also likely to mark
time, because of the depressive effect on expectations of the exchange rate trend
and the slight nature of the expansionary stance of fiscal policy, activity is liable
to weaken appreciably in the coming months, assuming there is no change in
economic policy.
This would probably have only a relatively limited impact
on the labour market, but it would result in a further widening of the current
surplus together with continuing pressure on the Swiss franc; that in turn would
cause a deterioration in firms' profits which would render more difficult the
extensive structural readjustments now under way, the success of which is vital
to a satisfactory and balanced growth of the Swiss economy in the medium-term.
As part of a concerted action to support activity in the OECD area, it
would be appropriate for Switzerland to take measures to ensure a higher rate of
expansion of its domestic demand, if the levelling off of the total demand, partic¬
ularly the domestic demand foreseen by the Secretariat occurs.
Such action
would be likely to contribute to a reduction of the current surplus. The Swiss
economy is admittedly relatively small, and the stimulus it could impart to world
activity is not very great, but its current surplus constitutes an important element
of the international payments disequilibrium, which represents a serious constraint
on demand management policy in other countries. Since 1974 this surplus has
Switzerland
53
been considerable and it now amounts to nearly 5* per cent of GNP.
If Switzer¬
land and other countries in a comparable situation do not contribute to a better
distribution of the OECD area's aggregate deficit, there is a strong risk that the
limits of indebtedness of a number of Member countries will soon be reached and
that protectionist pressures will increase, with obvious dangers for world trade
and the international payments system.
It is unlikely that a higher rate of growth of domestic demand than that
currently foreseeable for 1978 would compromise the results obtained in regard
to costs and prices.
Even allowing for the reduction in output potential resulting
from the decline in the labour force and the loss of economic value sustained by
part of the fixed capital stock, the margins of spare capacity and the potential
productivity gains are such that there is no danger at a global level of the emerg¬
ence of production bottlenecks.
In order that domestic demand take over partly
from foreign demand, it would be desirable for the liberal stance of monetary
policy to be maintained and for the downward trend in interest rates to continue.
But it is fiscal policy, in particular, which ought to be shifted to a more active
stance, should it prove necessary.
Fiscal measures to stimulate private con¬
sumption and/or private-sector investment might be envisaged, in order to facil¬
itate the sectoral restructuring now under way.
Measures of this nature would admittedly entail a temporary increase in the
public sector deficit.
In this regard, a number of comments are in order:
i)
ii)
Hi)
The deficit on general government consolidated account, which in 1978
should amount to a little under 2 per cent of GNP, is, although con¬
sidered by the Swiss authorities to be substantial, one of the smallest
among Member countries; in particular, it is appreciably less than that
of other countries with a large balance-of-payments surplus (Federal
Republic of Germany, Japan, Netherlands).
Further, Switzerland's
deficit does not take account of social security transactions, which on
a standardised national accounts basis usually show a surplus.
If the relative weakness of private investment were to continue and the
savings ratio of the private sector to remain at its present level, the
excess of ex ante saving over investment would have a deflationary
impact on the economy or stand in the way of a reduction of the current
surplus.
A more active fiscal policy, financing of which should not
pose any real problem, might then alleviate these effects, especially if it
were designed in such a way as to dispel the uncertainty which at present
weighs on investment decisions in the private sector.
In the medium-term, however, as already mentioned in earlier OECD
annual Surveys, there is a need to reform the structure of the Confed¬
eration's tax system so as to increase federal revenue and keep fiscal
policy sufficiently flexible.
The initial proposals presented by the
government were rejected last June by referendum, but it is to be hoped
that the new proposal for introducing VAT will be adopted.
In any
event, a relatively brisk growth of activity during the coming years could
only make it easier for the authorities to achieve their goal of bringing
the federal budget back into equilibrium in the medium-term.
In
another connection,
the recent revision
of the Federal
Constitution
should increase the effectiveness of demand management policy.
The very stringent measures introduced recently to prevent an excessive
appreciation of the Swiss franc should help to stem the inflow of foreign capital
and thus take some of the pressure off the exchange rate.
The complex machinery
that has been set up does not guarantee, however, that the franc will not come
under further pressure if the unsettled state of the international exchange markets
54
OECD Economic Surveys
continues.
The solution of this problem clearly requires concerted action on
an international scale.
But any sizeable reduction in Switzerland's current surplus,
through an appropriate adjustment of demand management policy, would help
to prevent sharp and destabilising fluctuations in the exchange rate that are hardly
compatible with the trend in relative costs and prices. An increase in Official
Development Aid might also contribute to the return of a more stable situation.
STATISTICAL ANNEX
LU
CD
<
û.
<
Où
Table A
National product and expenditure
Million Swiss francs, current prices
1967
1968
1969
1970
Consumers' expenditure
Government current expenditure1
42 150
44 910
48 670
53 325
59 745
67 780
75 945
83 135
86 035
7 335
7 905
8 680
9 635
11 385
12 880
14815
16 625
17 920
19 055
Gross fixed asset formation
18 325
19195
20 995
24 955
30 125
34 640
38 210
38 885
33 655
29 175
2 175
1915
2 025
4 290
3 325
2 455
2 530
5 200
-1690
-1050
69 985
73 925
80 370
92 205
104 580
117 755
131 500
143 845
135 920
135 680
Exports of goods and services
less: Imports of goods and services
23 345
26 565
30 520
34 585
37 620
42 140
47 605
54 760
52 090
56 550
21220
23 100
26 930
32 860
35715
39 360
44 565
52 110
43 620
46 320
Gross national product at market prices
72 110
77 390
83 960
93 930
106 485
120 535
134 540
146 495
144 390
145 910
Change in stocks1
National
1
2
expenditure
Includes private Social Security.
Including statistical discrepancy.
1971
1975
1972
1976
88 500
to
Source: Federal Bureau of Statistics.
o
3
a.
Table B
National product and expenditure
Million Swiss francs, 1970 prices
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
Consumers' expenditure
Government current expenditure1
46 195
47 985
50 605
53 325
55 870
58 905
60 535
60 245
58 475
8 440
8 765
9 195
9 635
10 190
10 490
10 740
10915
10 990
11430
Gross fixed asset formation
20 980
21625
22 910
24 955
27 415
28 780
29 615
28 355
24 505
21875
2 405
2 075
2 150
4 290
3 215
1985
1975
4 075
-1360
-825
National expenditure
78 020
80 450
84 860
92 205
96 690
100160
102 865
103 590
92 610
91270
Exports of goods and services
less: Imports of goods and services
25 560
28 310
32 005
34 585
36 130
38 530
41570
42 355
39 475
43 445
23 620
25 490
28 825
32 860
35 190
37 945
40480
40 250
34 515
38 365
Gross national product at market prices
79 960
83 270
88 040
93 930
97 630
100 745
103 955
105 695
97 570
96 350
Change in stocks'
1
2
Includes private Social Security.
Including statistical discrepancy.
Source: Federal Bureau of Statistics.
58 790
!
t>3
i
o
a
to
c
Table C
"Wholesale prices
1963=100
1976
1973
1974
1975
1976
1977
1977
1st
2nd
3rd
4th
1st
2nd
3rd
4th
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
148.2
147.7
148.7
149.3
147.7
146.0
130.8
151.9
148.5
147.5
147.9
146.5
147.7
130.6
140.4
140.9
145.0
154.4
142.5
144.5
145.6
147.6
155.1
158.9
153.0
150.4
130.7
140.2
140.7
144.2
154.0
141.8
144.1
144.4
146.6
154.4
158.8
153.2
149.7
129.5
142.7
143.7
155.0
158.6
150.1
149.3
160.0
160.6
164.2
160.1
150.9
159.0
146.1
175.8
183.1
191.6
191.8
190.0
192.4
191.8
192.3
192.9
192.7
191.7
189.8
130.7
150.5
154.4
148.3
149.0
149.8
148.6
148.0
147.0
148.0
148.6
148.6
150.6
126.5
135.2
110.3
115.1
116.3
111.2
112.7
117.3
119.0
118.5
118.0
116.9
111.6
128.6
147.2
149.5
139.0
141.7
140.4
138.4
138.9
138.3
139.7
141.7
142.3
143.3
Paper and paper products
Hides and skins, rubber and plastic
products
117.6
145.9
165.6
156.5
148.6
158.6
157.9
156.0
153.6
150.6
150.1
149.9
143.7
119.3
129.7
127.7
132.0
132.5
130.4
132.0
133.3
132.3
131.8
134.3
132.3
131.7
Chemicals and related products
Building materials, ceramics and glass
Metals and metal products
105.9
138.8
136.4
129.8
128.1
130.0
130.4
129.9
129.0
128.8
128.4
128.0
127.2
Total
By category of merchandise:
Farm goods
Non-processed food products
Feedstuffs
Energy and related products
Processed food products, drink
and
tobacco
Textiles
Wood
and
cork
149.7
166.6
176.6
175.5
175.5
176.5
175.7
175.2
174.6
175.4
175.8
175.5
175.2
153.5
185.7
165.5
164.0
157.3
161.5
166.3
166.2
162.1
160.3
158.9
156.6
153.6
Domestic
129.4
147.5
149.3
147.7
147.6
147.7
147.7
147.8
147.5
147.7
147.8
147.5
147.3
Foreign
134.1
162.5
146.5
147.1
148.7
143.7
147.8
149.0
147.9
151.0
152.9
148.1
143.0
By origin of merchandise:
Source: La Vie économique.
Table D
interest rates and capital markets
o
Million Swiss francs and percentages
1976
1972
1973
1974
1975
Year
1977
1st
2nd
3rd
4th
1st
2nd
3rd
4th
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
2*
2
2
2
2
2
14
14
1
1
Interest rates (end of period)
Discount rate
3Î
Call money (Zurich)
3 months deposits (Zurich)
Government bond yield
Savings deposits of 12 cantonal banks
5
4i
5
1
3
2
4
1
i
i
4
i
6
24
U
li
1
1
le
n
3i
2i
14
5.27
6.31
7.17
5.93
4.46
5.14
5.12
4.89
4.46
3.95
4.49
3.94
3.78
4.15
4.15
4.98
4.88
3.63
4.54
4.27
4.08
3.63
3.44
3.02
3.02
3.02
Euro-dollar three month
5.88
10.13
10.19
5.81
5.00
5.50
6.00
5.75
5.00
5.19
5.75
6.87
7.19
Euro-bond yields
7.49
8.30
9.35
8.52
7.39
8.14
8.11
8.00
7.39
7.70
7.64
7.53
7.95
Total security issues
Foreign bonds
11771
11772
9 825
14157
16 976
5 509
3 840
3 781
3 846
3 356
3 368
2 908
2 876
1011
2 355
3 420
786
879
910
845
807
760
942
1 175
Domestic bonds
5 726
5 978
5 643
9 109
10 367
4 135
2 138
2 172
1 922
1 916
1 624
Public market issues
4 983
5 084
5 328
7 361
8 390
2 767
2 087
1 659
1877
1823
1550
1 544
1798
f3'
of which: Government
1968
2 167
2 063
2 828
4 058
1590
941
739
788
789
522
229
294
to
4
54
54
Memorandum items:
Capital market
1673
1281
1464
1780
2 202
701
476
438
587
511
525
781
1010
1342
1636
1801
2 753
2 130
476
669
482
503
523
502
535
494
3 137
2 918
3 171
2 693
3 189
588
823
699
1079
633
984
403
709
1019
912
616
1090
1535
81
575
267
612
53
457
48
184
1533
2 403
2 049
2 240
2 857
677
818
592
770
1 361
1 651
1357
1456
Redemptions and conversions
Including holdings companies.
Source: Swiss National Bank, Monthly Bulletin.
8
o
Other private
Public market issues
1
hi
Financial Institutions1
Shares
§
8
5
Table E
Foreign trade by area
Million US dollars
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
Export s, fob
3 100.6
3 594.0
3 952.0
4 465.3
5 326.3
7 334.6
8 905.4
9 266.0
10 688.5
12 457.2
1 860.7
2 168.8
2 391.1
2 702.0
3 186.6
4 340.2
5 245.3
5 629.0
6 681.2
8 079.4
EFTA
462.0
541.2
625.7
751.7
885.0
1 195.9
1 592.0
1 584.7
1 705.6
1 864.7
USA
416.4
441.6
460.6
495.1
601.4
787.1
856.1
836.4
1 021.7
1
Other
361.5
442.4
474.6
516.5
653.3
1011.4
1 212.0
1 215.9
1 280.0
1 349.7
920.9
1 046.4
1 184.6
1 298.2
1 535.2
2 190.3
3 028.6
3 691.2
4 157.8
5 083.1
160.4
188.8
232.1
232.0
304.7
471.7
661.4
798.0
846.1
934.1
52.7
59.7
72.8
82.3
87.7
110.2
172.0
196.4
148.8
146 3
707.8
797.9
879.7
983.9
1 142.8
1 608.4
2 195.2
2 696.8
3 162.8
4 002.7
4 021.4
4 640.4
5 136.7
5 763.5
6 861.6
9 525.0
11 934.2
12 957.5
14 846.4
17 540.3
OECD countries'
EEC
Non-OECD countries
Sino-soviet
area
Other developed countries
Developing countries
Total
163.4
Imports, cif
4 004.2
4 692.7
5 804.5
6 524.2
7 697.3
10 409.1
12 643.4
11613.6
12 767.4
15 375.7
3 069.6
3 564.6
4 372.9
4 951.0
5 830.8
7 983.1
9 614.8
8 816.2
9 825.7
11917.9
EFTA
355.2
459.6
594.4
704.4
848.2
1 118.4
1 359.6
1 144.1
1 169.2
1 311.2
USA
403.2
446.4
550.6
515.3
585.5
737.2
946.4
1006.7
1011.2
1 204.2
Other
176.2
222.1
286.6
353.5
432.8
570.4
722.6
646.6
761.3
942.4
497.8
579.7
662.5
702.7
782.1
1211.5
1 801.6
1 688.9
2 005.9
2 525.6
106.9
128.3
152.8
161.5
180.3
278.9
404.5
375.1
535.8
636.7
10.1
9.1
14.3
10.0
13.7
22.3
27.1
28.9
28.0
52.9
380.8
442.3
495.4
531.2
588.1
910.3
1 370.0
1 284.9
1 442.3
1 836.0
4 501.9
5 272.3
6 467.0
7 227.0
8 479.4
11620.8
14 445.1
13 302.7
14 773.4
17 901.2
OECD countries1
EEC
Non-OECD countries
Sino-soviet area
Other developed countries
Developing countries
Total
1
Including Australia and New Zealand.
Source: OECD, Foreign Trade Statistics, Series A.
Table F
Foreign trade by commodity groups
Million US dollars
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
Exports, fob
0
Food and live animals
137.8
156.0
178
204
230
239
300
336
384
1
Beverages and tobacco
47.3
63.3
82
117
135
120
134
102
113
138
2
3
4
Crude materials, inedible, except fuels
Mineral fuels, lubricants and related materials
Animal and vegetable oils and fats
75.8
94.8
106
98
95
124
200
263
189
242
4.8
6.1
8
9
5
7
15
26
24
19
3.8
4.5
5
8
6
5
10
20
23
22
5
Chemicals
730.0
810.5
986
1081
1 220
6
7
Manufactured goods, classified chiefly by material
Machinery and transport equipment
581.8
652.2
763
821
912
1 056.7
1213.8
1430
1626
8
Miscellaneous manufactured articles
839.8
921.1
1024
1 107
9
Commodities and transactions not classified
according to kind
Total
425
1525
2 021
2 680
2 760
3213
1
140
1 592
2 106
2 145
2 763
1859
2 149
3 069
3 729
4 592
5 019
1231
1466
1 996
2 397
2 547
2 669
20.4
26.3
27
31
46
53
67
72
112
159
3 471.1
3 948.6
4 609
5 102
5 740
6 827
9 404
11731
12 889
14 669
Imports, cif
0
Food
and live animals
528.2
501.5
573
651
1A1
843
1 188
1 380
1 391
1445
1
Beverages and tobacco
90.2
97.9
109
147
144
175
249
246
226
233
2
Crude materials, inedible, except fuels
261.9
266.9
289
333
328
373
540
640
577
705
3
Mineral fuels, lubricants and related materials
257.3
299.4
299
350
467
462
831
1437
1 369
1577
4
Animal and vegetable oils and fats
5
Chemicals
6
7
Manufactured goods, classified chiefly by material
Machinery and transport equipment
8
Miscellaneous manufactured articles
9
Commodities
18.3
16.2
18
24
28
30
402.7
452.0
545
653
730
833
74
67
52
141
1708
1447
1720
3 135
44
1
941.4
1 027.6
1267
1580
1 595
1 887
2 580
3 279
2 734
1002.7
1 173.0
1 335
1740
2 039
2 453
3 041
3316
3 167
3411
567.3
634.6
790
930
1 392
1 913
2 283
2 269
2411
1
115
and transactions not classified
according to kind
Total
Source: OECD, Foreign Trade Statistics, Series B.
29.2
24.6
41
39
31
20
17
26
32
74
4 099.2
4 492.6
5 266
6 448
7 223
8 468
11 544
14 389
13 279
14 763
Table G
Balance of payments
Million US dollars
1967
A
1975
1974
1973
1976
3 692
4 247
4 907
5441
6 054
7 268
9 579
11945
13 609
15 458
4 006
4 399
5 146
6 291
7 049
8 309
10 976
13 690
13 177
14 657
Trade balance
-314
-152
-239
-850
-995
-1041
-1397
-1745
432
801
805
955
1072
1252
1452
1766
2 346
2 621
2 848
3 292
Balance on goods and services
Private transfers, net
Official transfers, net
Current balance
Non-monetary capital, net
D
Balance on non-monet. transactions (F
E
Priv. monet. instit. sh.-term capital
Assets (
E)
=increase)
Liabilities
F
1972
1971
Imports, fob1
of which: Investment income
Migrants' remittances
C
1970
1969
Exports, fob
Services, net
B
1968
355
441
519
705
838
1037
1496
1987
-375
-403
-467
-529
-668
-850
-1 149
-1312
1994
-1421
2 132
-1 196
491
803
833
402
457
725
949
876
3 280
4 093
-228
-238
-269
-290
-356
-436
-545
-566
-560
-440
-23
-20
-38
-42
-21
-69
-125
-139
-133
-156
240
545
526
70
80
220
279
171
2 587
3 497
-24
505
-369
1013
3 552
-83
1098
2 436
2 601
-822
2 675
216
1050
157
1083
3 632
137
1377
2 607
5 188
61
-526
-148
-394
-2 172
-70
-405
-2 160
-3 653
-73
-1 147
-1811
-2 398
-3 756
-10 395
-299
-4 376
-11217
-5816
-7 214
1208
1285
2 250
3 362
8 223
229
3 971
9 057
2 163
7 141
9
689
1460
67
972
447
1535
2 602
Balance on official settlements
(ca)=(D+E)
(a)
(r>)
(c)
Special transactions
Miscellaneous official accounts'
Change in reserves (-|-=increase)
(0
(li)
(iïi)
Gold
Currency assets'
Reserve position in IMF
277
524
-103
103
-23
-30
123
19
46
455
-733
-181
23
56
151
597
132
708
1506
522
239
266
1558
2 658
248
-465
18
90
177
-97
1062
114
618
1329
522
235
266
1463
2 460
95
195
3
4
Memorandum items:
Recorded official capital
Recorded private capital
Unrecorded capital and errors and omissions'
1
Import cif minus 5% as estimate for freight and Insurance.
2
Central bank liabilities and other assets.
3
4
Including Roosa-bonds held by the Confederation.
Obtained by difference.
-15
-24
-19
-46
130
-35
73
77
43
-396
-205
-625
-1133
-520
-1206
-2 063
-1754
-24
-3 501
-5173
196
1 154
783
1579
4 628
2 015
2 779
2 383
Sources: Swiss Balance of Payments Submission to the OECD, BIS sources and Secretariat estimates.
6 059
4 747
INTERNATIONAL
COMPARISONS
BASIC STATISTICS:
Population
Inhabitants per sq. km
Net average annual increase
Employment
Units
Mid-1976
Thousands
»
Number
Mid-1966 to Mid-1976
%
1976
»
»
»
33.2
»
»
Total civilian
of which : Agriculture, forestry, fishing
Industry*
Other
Gross domestic product at market prices
Average annual volume growth'
Per capita
1976
Austria
Canada
Belgium
Denmark
Finland
France
Germany
Greece
Ireland
Iceland
Italy
Japan
Luxem¬
Nether¬
New
bourg
lands
Zealand
Sweden
Switzer¬
land
Turkey
United
United
Yugo¬
Kingdom
States
slavia1
21560
9 818
23 143
5 073
4 729
52 921
61 513
9 165
220
3 162
112 768
357
13 770
3116
4027
9664
35 970
8 219
6 346
41 162
56 001
215118
90
322
2
118
16
%
247
69
2
45
186
299
138
407
12
12
109
71
20
154
52
230
23
83
1.8
0.3
0.3
1.4
0.6
0.3
0.7
0.4
0.6
1.2
0.9
0.7
1.3
0.7
1.0
1.5
0.7
0.6
1.1
0.5
0.6
2.4
0.2
0.9
(0.9)
Thousands
5 808
2 947
3 718
9 572
2 392
2 144
20 870
24 556
(3 230)
93»
1021
18 930
52 710
147
4 542
1206
1789
3 088
12 535
4 088
2 676
14 710
24425
87 485
8 887'
% of total
6.4
12.4
3.4
5.9
9.3
13.9
10.8
7.1
(34.3)
15.1»
23.8
15.5
12.2
6.1
6.5
11.8
9.4
27.1
21.5
6.2
8.2
63.1
2.7
3.8
47.3
40.1
39.0
29.7
31.4
34.7
38.1
45.1
(29.0)
37.6»
29.8
43.5
35.8
46.3
33.7
34.2
33.1
36.3
37.1
35.4
43.9
15.5
40.0
28.7
21.1
60.4
47.5
57.6
64.4
59.3
51.4
51.1
47.8
(36.7)
47.3»
46.4
41.0
52.0
47.6
59.8
54.0
57.5
36.6
41.4
58.4
47.9
21.4
57.3
67.5
31.6
94.12
40.62
65.91
194.60
38.53
28.14
346.76
445.91
22.04
1.45
7.93
170.77
555.06
2.24
89.52
12.86
31.30
15.74
104.62
74.22
56.29
41.06
219.18
1 702.02
3.5
3.9
3.1
4.6
2.3
3.8
4.1
2.4
4.8
3.8
2.9
3.2
5.1
1.9
3.5
3.5
4.8
4.3
4.9
2.5
-0.4
7.4
1.8
2.9
5.1
6 760
5 410
6 710
8 410
7 590
5 950
6 550
7 250
2400
6 610
2 510
3040
4 920
6 280
6 500
4130
7 770
1630
2 890
9 030
8 870
1000
3 910
7 910
1510
26.0
20.6
23.1
21.5
27.0
23.1
20.7
29.5
24.5
20.3
29.6
28.2
19.7
36.3
23.9
22.9
20.6
20.7
19.2
16.2
34.2
7.6
9.2
10.5
9.0
8.4
8.4
6.0
9.6»
8.6
13.4
8.6"
8.1
13.9
6.9"
8.9
8.7
6.7
8.6
6.8
14.1
5.0
5.1
3.8»
6.2»
4.0
" 3.7»
3.8
3.9
7.4
7.3
5.8
6.3
1.2
^4.4
11.7
0.0
0.0
4.8
3.8»
19.8
20.6
26.3
17.7»
18.9
17.4
35.6
19.1
US°$»
23.7'
21.5»
56 157'
25.2»
% of GDP
»
7.4»
10.5
»
»
5.0"
5.2
6.7
6.4
5.4
6.5
7.2
5.8
5.8
6.4
6.2»
5.8
7.9
7.6»
1971 to 1976
%
1.0
3.1
2.6
5.3
1.0
1.8
3.3
-1.2
-0.3
3.1
2.3
0.0
2.5
0.4
-1.6
1976
% of GNP
23,7' ïs
27.3
22.1
21.7
16.7
27.1
23.3
24.4
19.5
27.9
17.8
20.2
32.3
27.4»
24.5
20.6»
9.9
18.4»
National savings ratio12
Spain
7 510
»
Residential construction
Portugal
2
1976
of which : Machinery and equipment
Norway
13 916
US $ billion"
1971 to 1976
1976
Gross fixed capital formation
Average annual volume growth6
Australia
Reference period
INTERNATIONAL COMPARISONS
26.6
20.5»
32.56»
General government
1976
% of GDP
16.2'
16.5
17.9
20.1
24.2
19.7
14.7
20.4
15.3
19.5
14.0
10.9
15.5
18.3
17.1
15.4"
10.3
25.6
13.4
11.3»
21.8
18.7
Current transfer payments
»
»
10.4'
16.1"
21.4
12.1
17.5
14.4
24.1
19.1
10.9
21.9"
22.1
9.2
26.2"
30.5
23.7
9.1"
12.7
22.0
15.5
6.5"
15.2
11.8
Current revenue
»
»
32.6'
39.1"
35.5
36.8
46.5
44.8
42.4
42.2
29.4
34.2"
36.5
23.6
50.6»
53.5
50.1
24.7»
25.7
57.4
34.0
20.5"
40.6
31.5
1976
% of GNP
0.4
0.1
0.5
0.5
0.6
0.2
0.6
0.3
0.1
0.2
0.8
0.2
0.4
0.3
4 780
1960
2 790
Current expenditure on goods and services
Net official development assistance
0.8
0.4
0.7
42.2
Indicators of living standards
Private consumption per capita
Passenger cars, per 1 000 inhabitants
Telephones, per 1 000 inhabitants
Television sets, per 1 000 inhabitants
Doctors, per 1 000 inhabitants
1976
US S11
3 950
3040
4150
4 430
3 100
4 080
4 010
1680
3 980
1 580
4 280
1230
2 010
4 830
5 590
633"
2 350
5 110
821
1975
Number
368
229
266
374"
257
211
289
290
48
291
164
257"
154
391
249
373
237
97
136
336
278
8"
249
498
72
»
»
390
281
285
572
454
389
262
317
221
417
141
259
405
411
368
502
350
113
220
661
611
25
379
695
61
1974
»
227"
247
252
366
308
269
235
305
106
217"
178
213
233
257
259
304"
256
66
174
348
264
12
315
571
131
2.0
1.6"
1.2
1.8
0.6
1975
Access to higher education1'
»
Infant mortality1'
»
Wages and prices
Hourly earnings in industry1*
Consumer prices
»
% of relevant age group
Number
2.1
1.9
1.7
1.6"
1.4
39.7
15.91
34.4"
49.8"
36.3"
24.5
31.4"
24.2"
16.11*
20.5
16.2"
15.0"
10.7"
10.31
13.6
19.7
16.4
1.4"
1.5
1.9"
24.0"
11.4"
2.0"
1.21'
31.0
34.31'
17.0"
20.7
10.0
3 970
l.l1
3 720
2 380»
1.6
1.3
21. 11
14.8
1.7
1.3
1.6
1.6"
40.3"
(9.8)"
29.311
16.0
10.5"
37.9"
12.1
8.3
13.2
11.9
14.6
16.3"
20.8
13.4
7.5
8.7
13.0
9.4
16.9"
17.2
9.6
5.6
10.3
1.3"
1.61
1.4
21.8"
43.2
16.6
16.0
16.1
39.7
23.6"
17.0
7.8
20.4
16.3
7.7
18.7
(31. D1
10.7
Average annual increase
1971
to 1976
1972 to
1977
%
%
12.5
16.4
11.9
16.7
17.9
15.4
8.9
20.8
34.0"
19.9
20.8
17.7
13.1
7.7
9.7
8.9
10.8
14.5
10.3
5.7
16.1
34,3-
16.1
16.5
12.9
13116
8 508
8.6
Foreign trade
Exports of goods, fob
As percentage of GDP
Average annual volume increase
Imports of goods, cif
As percentage of GDP
Average annual volume increase
Total official reserves
As percentage of imports of goods
US $ million11
1976
%
»
1971
to 1976
US I million11
1976
»
1971
to
%
1976
%
%
End-1977
US $ million
In 1977
%
38 628
9108
6 342
55 812
102 036
2 544
396
3 312
36 924
67 224
38 748
2 780
7 920
1812
8 724
18 444
14 844
1960
46 260
114 996
4 556
21.1
48.9
20.4
23.8
22.3
16.1
22.5
11.5
28.3
42.5
22.6
12.2
43.9
22.4
25.7
11.5
8.5
25.0
26.2
5.1
21.3
6.8
13.9
3.7
7.7
7.3
4.1
4.2
4.0
7.6
7.6
17.0
6.6
6.9
10.1
7.0
2.3
8.4
2.6
11.2
3.1
4.8
5.1
8.2
7.1
11 196
11520
37 956
12420
7 392
64 392
87 780
6 012
468
4 200
43 368
64 800
39 948
2 830
11 112
4212
17460
19164
14 772
5129
55 968
121 788
6 881
12.1
28.5
52.6
20.0
32.5
26.0
33.4
53.8
26.5
11.7
45.2
22.8
36.1
26.8
17.0
26.0
26.1
12.9
25.8
7.2
21.0
5.6
8.4
6.7
8.4
5.4
5.3
3.7
6.3
4.3
5.1
6.4
3.2
10.4
5.6
1.1
5.0
4.7
2.5
2 384
4 244
5 761s1
4 608
100
2 372
11608
23 261
8 065
445
2 200
1076
6 590
3 668
13 830
774
21057
19 390
2 780
19.5
29.9
14.3»
11.7
16.3
44.0
32.8
17.7
37.1
18.2
77.2
13.5
33.1
13.1
28.8
14.1
1
2
Partly from national source*.
Total resident population.
7
3
Private and socialised sector.
9
4 According to the definition used in OECD: Labour Force Sutistks:rJtiiiii^, manufacture, coftftractica
and utilities (electricity, gas and water).
5
Social product.
6 At constant prices.
6" Private.
8
32 84421
35 352"
18.6
19.4
27.1
4.1
8.6
6.5
6.7
1 671
570
10194
39 737
12.6
7.5
14.5
39.5
Fiscal year beginning July 1st.
Excluding ships operating overseas.
Fiscal year beginning April 1st.
1973.
11
At current prices and exchange rates.
12
[
CPriv. cons. + Pub, cons.)]
GNP
13
1972.
14
1971
to
1976.
15 Figures are not strictly comparable due to differences in coverage. For more details see '
tional Statistics Yearbook - Volume 1 (1974) and volume 2 (1975) - OECD, Paris ".
10
L
1020
J
x
100.
16
1974.
17
18
Deaths in first year per 1 000 live births.
Figures are not strictly comparable due to differences in coverage.
19
1971
to 1975.
Educa-
20
1970 to 1975.
21
Including Luxembourg.
22
1975.
Note
Figures within brackets are estimates by the OECD Secretariat.
Sources: Common to all subjects and countries: OECD: Labour Force Statistics, Main Economic Indi¬
cators, National Accounts, Observer, Statistics of Foreign Trade (Series A); Office Statistique des Communautés
Européennes, Statistiques de base de la Communauté; IMF, International Financial Statistics; UN, Statistical
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(10 78 26D ISBN 92-64-11764-4
ISSN 0376-6438
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