Despite earning a slightly better score than last year, Switzerland has dropped four places as a destination for foreign direct investment in a survey that looks at countries likely to attract the most FDI in the next three years.
The 2019 AT Kearney Foreign Direct Investment Confidence Indexexternal link puts the country in 13th place compared to 9th last year. According to the report Switzerland is highly vulnerable to political and economic instability abroad as it has one of the most globalized economies in Europe. Main risks include a weakening global economy and the impact of Brexit. The report warned that the Swiss prospects could weaken further if its relationship with the European Union continues to deteriorate.
“This issue could be affecting business confidence in the Swiss market and contributing to its relative fall in the Index ranking,” says the report.
In 2017, 55% of the FDI was concentrated in the Swiss finance and holdings sector. However, the report warns that increased competitiveness elsewhere could blunt the Alpine nation’s investment appeal. The country was one of the hardest hit by US tax reforms in 2017 and experienced net negative FDI flows of $141 billion in 2018.
On the positive front, mergers and acquisitions seem to be thriving. For example, French firm Worldline acquired Swiss company SIX Payment Services for around $3.2 billion. The chemicals and plastics sector are also doing well with Saudi firm SABIC taking a quarter stake in Clariant for $2.5 billion.