Swiss economy shows robust health

Pharmaceuticals was the clear leader in the economy in 2004 Keystone

Most sectors of the Swiss economy performed better in 2004 than had been expected, with sales and earnings improving markedly.

This content was published on January 10, 2005

Businesses are confident about the prospects for this year, according to a survey by Switzerland’s biggest bank, UBS.

The pharmaceuticals industry was the clear sector leader in 2004 and would remain so this year, it added.

UBS said the optimism expressed a year ago for 2004 was “more than just wishful thinking”.

According to the poll, sales in no fewer than 20 of the 27 sectors covered exceeded expectations, particularly in the watchmaking, pharmaceuticals, metals, building materials and chemicals industries. Disappointing results were said to be few and far between.

Logistics, retail and parts of the construction industry reported a more lacklustre sales trend on average.

“Meagre pickings”

The UBS survey, published on Monday, revealed that after two years of “meagre pickings”, profitability improved in most of the sectors covered.

The most impressive turnaround was achieved in the watchmaking, chemicals, metals and tourism industries, where earnings swung back into positive territory after suffering a “disturbing decline” in 2003.

In line with their sales performance, pharmaceutical companies reported the strongest increases in earnings, while only the construction industry and logistics companies continued to see a negative earnings trend.

The companies surveyed forecast that the main thrust of the upswing this year would gradually ebb, amid uncertainty as to the robustness of the global economy.

Losing momentum

UBS commented that it was in those sectors that expanded most vigorously in 2004 that sales and business volumes would lose momentum.

However, it added that the pharma sector should continue to lead the way in 2005. Other sectors with ambitious expectations include watchmaking, insurance and telecommunications.

The only sectors forecasting slightly lower volumes are the construction industry, architecture and engineering.

Earnings forecasts point to a further improvement, although the pace will be slower than in 2004.

The most optimistic respondents were the watchmakers, telecoms, pharma and insurance.

Slight deterioration

But health and social services, construction, and architecture and engineering foresee a slight deterioration.

A period of staff reductions came to an end last year but companies expect any improvement in employment levels to be only gradual.

On the positive side, there are no plans for major job cuts this year except in the tourism sector.

Pharmaceuticals companies are likely to lead the field again as a magnet for job hunters, found the survey.


Key facts

2004 was a far better year than expected for most sectors of the Swiss economy.
Businesses are also confident about the prospects for this year.
The UBS survey was carried out among 4,500 companies in 27 main sectors and 95 sub-sectors.

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