The good news is that playing this way in Victoria 3 is considerably more fun than in Hearts of Iron 4. Victoria 3 is mostly an economic game, so concentrating on your economy basically works. However, one can see that nobody playtested the game like that. There are some rather glaring design flaws that become very obvious if you play Switzerland.

The biggest design flaw I encountered as Switzerland in Victoria 3 is how you are limited with what other markets you can trade. Landlocked nations are basically screwed in the game, because without a port you can only trade with your direct neighbors. I couldn't even trade with Bavaria, which is very close to Switzerland, because smaller German states were in the way. And I couldn't trade with Italy either, because Italy for some reason had decided to join a customs union with Russia, and so the game used my distance to Moscow to determine that I couldn't trade with my direct neighbor Italy.

Customs unions in Victoria 3 are extremely powerful and give a huge boost to your economy. But because you can lose a customs union when the other country has political trouble, the reverse is also true: Getting kicked out of a customs union can totally ruin your economy. Which totally messes up the idea of playing the game in a purely economic way.

After having played a both Belgium and Switzerland and ending up bankrupt in both games in the same way, I am now pretty certain that there are bugs or design errors in the way welfare payments are calculated. Basically they are based on your most profitable industries, and set at a far too high level. If unemployed people are getting paid 50% of the highest possible wage even with very conservative social security laws, any downturn quickly turns into a death spiral: You budget is in ruins because of high welfare payments, and you have huge numbers of unemployed people despite also having huge numbers of job openings.

Not a design flaw, but a serious limitation when playing as Switzerland, is that the lack of access to colonies results in you being unable to develop your economy beyond a certain point. The latter stages of the tech tree all require goods like oil and rubber, which are mostly found in the colonies. Also many luxury goods, like coffee, tea, and tobacco are from the colonies.

At least this playthrough I managed my politics much better. Most of my population was loyalist, and I had very few radicals. Which meant that I never had to deal with revolution. But the revolutions of other countries often messed up my trade relations and thus economy. And unlike Hearts of Iron 4, there is no setting where you push the AI to follow historical precedence. In this game the USA became communist, and Germany was formed by Prussia swallowing Austria, but failed to annex a lot of the tiny German states.

I think I'll stop playing Victoria 3 now, until there are a few more patches that fix some of the things that annoy me about the game.