There’s a reason why phrases such as “I’m Switzerland” have gained so much popularity over the years. Despite the fact that the country has refrained from participating in wars, be it World War 2 or conflicts experienced by its neighbouring countries, Switzerland has also been categorised as the safe heaven of Earth. It is known for being the richest province in the European Union with unimaginable sceneries, friendly citizens, and a luxurious lifestyle. As of 2023, it was declared to have the second highest per capita GDP in the world, based on statistics published by the International Monetary Fund (IMF).
It is no secret that the Covid-19 pandemic shook the economic balance of some of the wealthiest nations to exist, including the United States of America-a monetary superpower- but it is Switzerland that remained a rock amidst the storm. When inflation rates had reached an all time high in 2022, Switzerland’s rates only increased by 3.5%, which were well below the double-digit rates of other advanced economies. For instance, the U.S. rates had hit 9.1%, the UK had hit 11.1%, and the Euro zone with 10.6%. These striking numbers lead us to wonder about the factors that have repeatedly led the Swiss economy to thrive amidst global crises.
Firstly, Switzerland is home to some of the wealthiest citizens of the world. As per an article published by cnbc.com, Swiss adults have “a mean wealth of $694, 604 per adult- and a steep cost of living to match”. As a matter of fact, Zurich and Geneva both have been listed among the 10 most expensive cities to live in by the Economic Intelligence Unit. Another reason is the stability of the Swiss franc, which reached parity against the Euro in 2022. The Swiss franc is heavily backed by reserves of gold, bonds, financial assets, which help the Swiss National Bank ensure stability in challenging times.
Moreover, the constant growth of the value of the U.S dollar has benefitted the Swiss economy as well as it is highly dependent on international trade. As per data published by the OEC world website, Switzerland imports roughly $302 billion worth of goods and services, with Gold being the highest imported product, particularly from other EU countries. The strength of the Swiss franc provides an effective discount on these prices. Additionally, the country exports a near equal of $305 billion annually, largely comprising of luxury goods such as watches and knives. The country also has a strong control over the price of its goods and services, which makes it less susceptible to inflation-led scenarios. For example, Swiss prices rose at a rate of 4.0% in December of 2022, which is extremely low in comparison to the whooping 11.9% increase in the U.S., 16.9% in the UK, and 19.8% in Germany.
In conclusion, the intricate and friendly policies of the Swiss economy continues to impress economists and scientists. Economic freedom, an open economy, intellectual property rights, and political stability are some of the key factors driving the Swiss economic success. The best case scenario for the safe heaven is that it dares to remain different from any system. The best case, however, is not always the most probable.
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