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Tuesday, May 24, 2022

The Russian war is having a much bigger impact on the Swiss economy than the sanctions

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A survey recently published by economysuisse shows that the war in Ukraine is affecting the Swiss economy in all areas. One in two Swiss companies surveyed is affected. War-related difficulties in obtaining raw materials and distortions in energy markets play a role. Western sanctions are also having an impact, with around one in four companies surveyed saying they were affected. This means that about half as many companies are affected by western punitive measures than by the effects of war. Although the sanctions are onerous for these companies, the vast majority support them.

The detailed assessment of the survey by economysuisse now shows that the sectors are affected very differently by the sanctions and the effects of the war:

  • Banks and asset managers bear the brunt of Western sanctions. About one in two financial institutions surveyed has to respond to the freezing of financial assets and the exclusion of five Russian banks from the SWIFT system. But many investment advisory firms also say they have been affected by the sanctions.
  • The export industry was the most affected by the war: this applies to the chemical, electrical and metallurgical industries, as well as wholesale. These sectors also report a high level of sanctions, between 30 and 40 percent of companies. For one thing, some companies operate locations in Russia and Belarus, or source raw materials from there. However, production often comes to a standstill there. On the other hand, there are export prohibitions. This affects many Swiss companies as suppliers to European producers, often indirectly.
  • The sectors that have suffered little from the sanctions (textile industry, construction, food industry) state that they have been severely affected by the effects of the war. Here delivery bottlenecks and material and raw material price increases (wood, oils, energy) make production more difficult and costly.
  • When it comes to transportation, the fact that many truck drivers in Europe come from Russia, Belarus or Ukraine plays a certain role. While these are not subject to sanctions, there is uncertainty as to whether they will still be able to cross borders. The aviation industry is also affected by airspace closures, both in the west and in Russia.
  • Tourism is particularly feeling the effects of the suspension of the visa agreement with Russia, although not always directly. Some Russian guests are staying away from Switzerland for fear of a possible crackdown. Some tour providers also report that some American and Asian travelers avoid Europe because of the war.
  • The pharmaceutical industry is also showing that sanctions are having an impact, although medicines are not explicitly subject to the sanctions regime: due to difficulties in international payment transactions, medicines cannot be delivered to a hospital in Donbass, for example. , or they can only be delivered in difficult conditions.

Although the sanctions are a burden on the Swiss export economy and the Swiss financial center, they keep problems within limits overall. The real challenge is presented by the upheavals caused by war. Against the background of the brutality of the war, there is great uncertainty about the next steps Russia will take. As long as there is no prospect of a peaceful solution to the conflict, supply bottlenecks and high price levels for energy, raw materials and processed products will persist.

The results come from a survey conducted by economysuisse, which was carried out from March 2 to 10, 2022. The responses were not weighted and the results are not intended to be representative. You can find more information about the survey here.


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