The world seems to be combating the deadly effects of high inflation, prices continue to rise in countries around the world. But there is one nation that seems to have escaped most of the hard realities of this worldwide economic burden.
Switzerland, the beautiful, mountainous nation in western Europe, hit its 29-year high of just 3.5% in 2022. That is significantly below the double-digit rates of other advanced economies. The U.S. stands at 9.1%, the U.K. at 11.1% and the Euro Zone at 10.6%.
So what is the Switzerland secret? The country has one of the world’s wealthiest countries and it is also home to some of the richest citizens in the world. The mean wealth is $696,604 per adult and the cost of living is steep.
The Swiss cities of Zurich and Geneva held steady in a ranking of the world’s most expensive cities in 2022. Therefore, Swiss citizens were generally less impacted by price rises because they tend to spend a lower amount of their income on essentials like food and living expenses.
“Because people are on average quite rich, the share of food in the overall budget of households is not as big as maybe in other countries,” Tobias Straumann, professor of economic history at the University of Zurich said.
Another reason for Switzerland’s relative price stability comes from the strong Swiss franc. The Swiss franc is heavily backed by a large reserve of gold, bonds, and financial assets.
The Swiss also have an economy heavily dependent on international trade. They import about $302 billion worth of goods and services each year, but they export about $305 billion annually. And the goods exported, like watches and pharmaceuticals are less susceptible to price fluctuations.
The economy is Switzerland is difficult for most countries to emulate. But the nationalization of the Swiss energy provision does provide a lesson to other countries.
“In the medium to short-term, that was a very good idea,” said the privatization of energy supply. “But it’s not very resilient and they are haunted by that now.”
“At the time, many people said the Swiss are too conservative,” he added. “But I’d say in retrospect it was a very good decision.”