Switzerland has been enjoying a vigorous economic expansion, which has benefited from buoyant financial market activity, strong foreign demand and a depreciating currency. Some of the drivers of this growth may prove to be temporary, although large immigration flows, which have contributed to substantial job creation, are likely to make a longer-lasting contribution to the expansion of potential output. Supported by high levels of employment, GDP per capita is still among the highest in the OECD. Yet economy-wide productivity is well below levels observed in leading countries, reflecting relatively weak productivity performance in sectors not exposed to international competition. While the general government’s budget has swung into surplus in recent years, strong spending growth in social entitlement programmes poses risks for the capacity of fiscal policy to contribute to enhancing prosperity.