Oil and other commodity trading have a much larger share in the gross domestic product (GDP) of Switzerland than its tourism sector, according to data from the Swiss State Secretariat for Economic Affairs cited by Bloomberg.
Some of the biggest independent commodity traders in the world, including Vitol, Glencore, Trafigura, and Gunvor, have either their headquarters or large offices in Switzerland, also because some Swiss cantons have low-tax regimes.
According to the data from the State Secretariat for Economic Affairs, commodity trading accounted for 4.8 percent of the Swiss GDP in 2018, much more than the tourism sector, which represented 2.9 percent of GDP in that year. This 4.8-percent contribution of the commodity trading industry is higher than previous estimates of around four percent.
Back in 2018, the commodity trading industry in Switzerland generated combined revenues of $33 billion, according to the data quoted by Bloomberg.
In the past year, the extreme volatility in the oil market helped some of the biggest oil trading groups based in Switzerland to generate record revenues and profits.
Trafigura, for example, delivered record core earnings in what became its strongest trading year ever due to the extreme oil market swings earlier in 2020.
In its annual report for 2020, covering the financial year ended on September 30, Trafigura booked exceptionally strong financial results, mostly thanks to its core oil and petroleum trading business. The commodity trader’s net profit was the highest since 2013, while the gross profit and earnings before interest, tax, depreciation, and amortization (EBITDA) were the highest on record.
The biggest commodity traders typically profit from a glut in oil markets as they store oil to sell at higher prices in the future. In the second quarter of 2020, the oversupply on the market reached record highs as global oil demand crashed in the pandemic, and Saudi Arabia and Russia briefly fought a price war for market share, which also contributed to the glut and to the oil price collapse.
This article was originally published on Oilprice.com