Statistics released Thursday by the Swiss National Bank showed the effects of the financial crisis on the economy, with the current account surplus dropping to just 2 per cent and a negative investment income for the first time since 1947.The troubling figures were blamed in large part on the poor performance of Switzerland's largest banks, which posted massive losses in 2008.
"The heavy losses by banks' foreign subsidiaries were the main reason for this decline," the SNB said in a statement. "Indeed, these losses were so severe that receipts were lower than expenses both in the case of investment income from direct investment and investment income overall," the central bank reported. It was the first negative investment income since the SNB started keeping statistics in 1947.
The bank, along with the government, helped bail out UBS, Switzerland's largest bank by assets, which last year reported a loss of around 20 billion dollars, the largest loss ever for a Swiss corporate entity. The bank's toxic assets were moved to the SNB and the government bought convertible bonds. The SNB also had capital outflows in order to pump liquidity into the global markets, saying this was in an attempt to unfreeze money markets locked up by the credit crunch.
The SNB also sold 105 tons of gold to the private sector, it reported, and the proceeds, equalling 3 billion francs (2.79 billion dollars), were invested in securities. The current account surplus fell from 52 billion Swiss francs to 13 billion francs, which was 2 per cent on the positive side in relation to the gross domestic product.
These were the lowest levels since the downturn of the 1980s. By comparison, in 2007, the surplus was 10 per cent of GDP. Direct investment abroad in 2008 dropped from 73 billion francs to 48 billion, with money being pulled out of emerging markets and put into the developed economies.
Emerging countries have complained since last year that they were experiencing large outflows of capital, as investors pulled their money back to the developed markets. Switzerland, an export dependant economy, was also reporting lower levels of trade.