Russ­ian war against Ukraine im­pact­ing the Swiss econ­omy more strongly than the sanc­tions

A sur­vey re­cently pub­lished by economiesu­isse shows that the con­flict in Ukraine is hav­ing a com­pre­hen­sive im­pact on Switzer­land’s busi­nesses. This has been con­firmed by every sec­ond re­spond­ing com­pany. The prob­lems as­so­ci­ated with the pro­cure­ment of raw ma­te­ri­als and the re­sult­ing up­heavals on the en­ergy mar­kets are a major fac­tor. But the sanc­tions im­posed by West­ern na­tions are also caus­ing prob­lems for Swiss com­pa­nies: ap­prox­i­mately one in four of the com­pa­nies par­tic­i­pat­ing in the sur­vey stated that they are feel­ing the ef­fects of the sanc­tions. This means that the num­ber of com­pa­nies being af­fected by the sanc­tions is roughly half that of those im­pacted di­rectly by the war. Al­though they rep­re­sent a bur­den for these com­pa­nies, most of them nonethe­less sup­port the sanc­tions.

A de­tailed eval­u­a­tion of the sur­vey con­ducted by economiesu­isse shows that the im­pacts of the sanc­tions and those di­rectly at­trib­ut­able to the con­flict vary con­sid­er­ably from sec­tor to sec­tor:

• It is banks and wealth man­agers that are being hard­est hit by the sanc­tions. Roughly every sec­ond re­spond­ing fi­nan­cial in­sti­tu­tion now has to react to the block­ing of fi­nan­cial as­sets and the ex­clu­sion of five Russ­ian banks from the SWIFT sys­tem. But many fi­nan­cial con­sult­ing com­pa­nies also state that they are being af­fected by the sanc­tions.
• The di­rect im­pacts of the con­flict are hit­ting the ex­port in­dus­try the hard­est: this ap­plies es­pe­cially to the chem­i­cals, elec­tric­ity and met­als in­dus­tries, as well as to whole­salers. Be­tween 30 and 40 per­cent of the com­pa­nies in these sec­tors also re­port that the sanc­tions are strongly im­pact­ing them. On the one hand, some of these com­pa­nies op­er­ate busi­nesses in Rus­sia or Be­larus, or pro­cure raw ma­te­ri­als from those coun­tries. In many cases, pro­duc­tion there has been halted. And on the other hand, ex­port bans are in place. These often also in­di­rectly af­fect many Swiss com­pa­nies that act as sup­pli­ers for Eu­ro­pean man­u­fac­tur­ers.
• Those sec­tors that are af­fected by the sanc­tions to a lesser ex­tent (tex­tiles, con­struc­tion and food­stuffs) re­port that they are being hard hit by the di­rect im­pacts of the con­flict. Here, sup­ply short­ages and price in­creases of ma­te­ri­als and com­modi­ties (tim­ber, oil, en­ergy sources) are ham­per­ing pro­duc­tion.
• In the trans­port in­dus­try, the fact that many heavy goods ve­hi­cle dri­vers in Eu­rope come from Rus­sia, Be­larus or Ukraine is also caus­ing prob­lems. Al­though no sanc­tions apply to these dri­vers, it is un­cer­tain whether they can still cross the bor­ders. The avi­a­tion sec­tor is being ad­di­tion­ally bur­dened by clo­sures of air­space, both in the West and in Rus­sia.
• The tourism in­dus­try is feel­ing the ef­fects of the sus­pen­sion of the visa agree­ment with Rus­sia – if not al­ways di­rectly. Russ­ian vis­i­tors are re­frain­ing from trav­el­ling to Switzer­land, partly out of fear of pos­si­ble re­pres­sions. And some tourism providers also re­port that many Amer­i­can and Asian tourists are avoid­ing Eu­rope be­cause of the war.
• The phar­ma­ceu­ti­cals in­dus­try is also re­port­ing neg­a­tive con­se­quences, even though medica­ments are ex­pressly ex­cluded from the sanc­tions. Due to the dif­fi­cul­ties re­lat­ing to in­ter­na­tional pay­ment trans­ac­tions, sup­ply­ing medica­ments to hos­pi­tals (for ex­am­ple in Don­bass) has be­come dif­fi­cult or vir­tu­ally im­pos­si­ble.

Al­though the sanc­tions are bur­den­ing Switzer­land’s ex­port in­dus­try and its fi­nan­cial ser­vices sec­tor, over­all the prob­lems are re­main­ing within rea­son­able bounds. It is the up­heavals caused by the con­flict that rep­re­sent the real chal­lenge. Given the bru­tal­ity of the war, there is a great deal of un­cer­tainty con­cern­ing the next moves Rus­sia might make. As long as there is no prospect of a peace­ful so­lu­tion, the sup­ply short­ages and sharp in­creases in the prices of en­ergy, raw ma­te­ri­als and processed prod­ucts will per­sist.

The find­ings are based on the sur­vey con­ducted by economiesu­isse from 2 to 10 March 2022. The re­sponses were not in­di­vid­u­ally weighted and the re­sults do not claim to be rep­re­sen­ta­tive. For fur­ther in­for­ma­tion about the sur­vey, please click here.