By Philip Combs

U.S. exports to Switzerland and Austria grew impressively during 1991 despite a mild recession in Switzerland and a leveling off of economic growth in Austria. Sales opportunities in the two countries remain excellent, partly the result of continuing favorable exchange rates of local currencies with the dollar. However, U.S. firms will meet stiff competition from Japanese and European Community (EC) suppliers. As always, the ingredients of a successful marketing effort include quality products and services, reputable and reliable back-up, and a long-term commitment to the market.

Switzerland

The Swiss economy experienced a mild recession in 1991 following eight consecutive years of economic growth. While real growth declined about 0.2 percent in 1991, projections for this year range upwards to 1 percent growth. The Swiss economy has been marked by high interest rates, persistent inflation, and growing unemployment. Exports, accounting for 35 percent of GDP, have been hampered by weak international demand. A restrictive monetary policy, introduced in 1989 to cool an overheated economy and hold down prices, began to have an impact in the second half of 1991. Inflation peaked last summer and averaged 5.9 percent for the year.

U.S. exports 1991--$5.6 billion U.S. imports 1991--$5.6 billion

Projections for 1992 assume slow recovery in the United States and major European economies, stable or lower oil prices, and declines in interest rates and prices. The domestic economy would then begin to improve in the second half of the year. Monetary policy will remain tight as long as inflation stays high.

After nearly a decade of acute shortages of skilled labor and widespread overemployment, the number of unemployed workers rose above the number of jobs offered. Unemployment rose from 0.6 percent in 1990 to 1.3 percent in 1991. The economic slowdown is partly responsible, but other factors include the widespread restructuring in industry as a result of mergers, relocation of manufacturing facilities to low-wage countries, and reduction of inflated administrative structures.

The hoped-for conclusion of the EC negotiations with European Free Trade Area (EFTA) members (including Switzerland) may have far-reaching effects on the Swiss economy. A referendum on the European Economic Area (EEA), the common economic area that the EC and the EFTA are creating, is scheduled for December 1992. In October 1991, the Swiss Cabinet announced that it would sign the EEA treaty and that Switzerland's long-term goal would be full EC membership. While no date for filing an EC membership application has been announced, the Swiss have already started focusing on the complex political and economic implications of EC membership.

U.S. firms that are positioned to compete in the newly integrating European Community will also be competitive in Switzerland. The country offers a receptive market for products that offer state-of-the-art technology, especially where it provides labor-saving solutions. Switzerland is a high-cost country where, despite a rising unemployment rate, the availability of skilled labor remains fairly tight.

U.S. firms exported $5.6 billion of goods to Switzerland in 1991, up 12.4 percent from the year before. The U.S. market share was 7.3 percent. U.S. imports from Switzerland showed no growth, remaining at $5.6 billion. Best sales prospects include computers and peripherals, computer software and services, avionics/ground support equipment, dental equipment, industrial process controls, franchising, aircraft and parts, industrial chemicals, hotel/restaurant equipment, and medical equipment.

Trade events in Switzerland this year supported by the Commerce Department include Worlddidac '92 (educational and teaching equipment), May 5-8 in Basel; Meet American Business Meeting, May 20 in Bern; NAB/Montreux International (radio conference and exhibition), June 10-13; Air Forum '92 (air traffic control and civil aviation), Oct. 14-17 in Geneva; and Travel Trade Workshop, Oct. 27-29 in Montreux.

Austria

Austria's economy is expected to grow 2 percent in real terms in 1992. Private household consumption should remain firm and lead to a slightly lower savings rate. Investment levels are likely to remain high as preparations are made for EC membership, and the anticipated business opportunities in Central and Eastern Europe. Austria's earlier economic boom has leveled off, as the 4.9 percent economic growth rate for 1990 declined to 2.8 percent last year. Strong investment and lively private consumption supported the 1991 growth as Austria's export expansion ended.

U.S. exports 1991--$1.1 billion U.S. imports 1991--$1.3 billion

Austria has applied for full membership in the EC, and formal negotiations for accession could begin as early as the second half of 1992. Austria will continue to integrate its own economy more closely with that of the EC.

Austria's "Grand Coalition" government of the Social Democrats and the People's Party will have to deal with a variety of economic and political issues during the next year. On the economic side, important issues include further reducing the federal budget deficit, amending over 100 federal laws to prepare for integration with the EC, and preparing the second stage of a tax reform program to go into effect in 1993.

A stable economic and political climate, strong currency, 30 percent corporate tax rate, and liberal foreign exchange regime contribute to making Austria an attractive market for both U.S. exporters and investors. Austria has also gained importance as a gateway for U.S. firms targeting Central and Eastern European markets. The prospect of EC membership makes Austria an attractive base for U.S. business.

U.S. exports to Austria expanded 20.6 percent to $1.1 billion in 1991, giving U.S. firms a 3.9 percent market share. Imports dropped 3.4 percent to $1.3 billion. Best sales prospects include computers and peripherals, computer software and services, drugs and pharmaceuticals, electronic components, aircraft and parts, medical equipment, autos/light trucks/vans, laboratory/scientific instruments, industrial chemicals, and plastics and resins.

The following trade events will take place in Vienna: the conference on American Business Opportunities in the Danube Basin, June 1-2; a U.S. Pavilion, including a video catalog show, at Intertool Austria '92 (machine tools), Sept. 29-Oct. 3; a telecommunications seminar in October or November; and business consultation days to be held in November.

For additional information, contact the Desk Officer for Switzerland/Austria at (202) 482-2920.

Source: International Trade Administration, Business America Magazine