Swiss payments balance falls sharply in 2008
Foreign investment in Switzerland reaches historic low in 2008.Geneva -- Heavy losses by Swiss banks abroad hurt the Swiss balance of payments to the extent of CHF 39 billion in 2008 when investment income showed a record drop in the financial crisis, the central bank said on Thursday.
A surplus on Switzerland's current account fell from CHF 52 billion (USD 48 billion, EUR 34 billion) in 2007 to CHF 13 billion in 2008 as direct investments abroad fell, the Swiss National Bank said in a statement.
The 2008 surplus was equivalent to two percent of GDP, about one fifth of its level in 2007.
"The heavy losses by banks' foreign subsidiaries were the main reason for this decline," it explained, underlining the scale of the impact of the global financial crisis on the country's flagship banking sector.
"Net investment income was therefore negative for the first time since 1947 when current account statistics were first compiled."
Income from direct investment abroad fell from CHF 60 billion in 2007 to just CHF 8 billion in 2008.
The losses were so severe that investment income within foreign trade-dependent Switzerland exceeded receipts from foreign investment by CHF 25 billion.
The central bank described the current account trend in 2008 as "extraordinary and unprecedented" and "attributable to the losses incurred by the foreign subsidiaries of banks."
Trade in goods and services only started to suffer in the fourth quarter of 2008, and the Swiss economy still ended the year with its biggest-ever trade surplus of CHF 19 billion.
Swiss direct investment abroad fell from CHF 73 billion to CHF 48 billion.
The United States and offshore financial centres of Europe were the prime investment destinations.
But "significant funds were withdrawn from Asia," the National Bank said.
AFP / Expatica