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1994-05-02
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<text>
<title>
Switzerland: World Trade Outlook
</title>
<article>
<hdr>
World Trade Outlook 1992: Switzerland/Austria
Excellent U.S. Export Growth Is Expected to Continue in '92
</hdr>
<body>
<p>By Philip Combs
</p>
<p>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.
</p>
<p>Switzerland
</p>
<p> 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.
</p>
<p>U.S. exports 1991--$5.6 billion U.S. imports 1991--$5.6
billion
</p>
<p> 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.
</p>
<p> 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.
</p>
<p> 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.
</p>
<p> 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.
</p>
<p> 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.
</p>
<p> 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.
</p>
<p>Austria
</p>
<p> 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.
</p>
<p>U.S. exports 1991--$1.1 billion U.S. imports 1991--$1.3
billion
</p>
<p> 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.
</p>
<p> 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.
</p>
<p> 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.
</p>
<p> 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.
</p>
<p> 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.
</p>
<p> For additional information, contact the Desk Officer for
Switzerland/Austria at (202) 482-2920.
</p>
<p>Source: International Trade Administration, Business America Magazine
</p>
</body>
</article>
</text>