Is Swiss Franc Still a Safe Haven?
The economy of Switzerland is dematerializing, and with negative direct material input and negative percentage of DMI, the stable GDP and material efficiency do not count much to conclude that the Swiss economy is indeed, a safe haven for investors. It is enough to say that the country is in vigorous economic expansion, out of weak economic growth in 2001 and 2002. Switzerland is a prosperous country but stuck in low-growth trap while facing fiscal policy problems. Its stable GDP only resulted to a rising stock-market indices, as well as, strong increases in the market turnover.By dealing positively with the raising growth performance, and restoring better control over public spending, the temporary upswing could turn into a more permanent one.
Is Swiss Franc Still a Safe Haven? Switzerland is a country with an area of 15,940 sq mi or 41,284 sq km, and a population of 7. 52 million people divided among the German, French, and Italian (Switzerland, n. d. ).
Four languages are in use: German, French, Italian, as well as Romansh. For the administrative, the main capital is in Bern, while Lausanne for the judicial.There are three regions: first are the Jura Mountains; second is the central Mitteland; third and last is the Alps (Switzerland, n. d. ).
It is considered as “one of the world’s major financial centers (wherein) its economy is based largely on international trade and banking, as well as light and heavy industries” (Switzerland, n. d. ). Tourism and agriculture are said to be the two most important industries that give Switzerland the power to stay neutral concerning the EU. It carries one of the oldest democracies in the world, as it has stayed for about 700 years more or less.As of now, it is being stated that “73% of the Swiss population live in urban areas” (Swiss Federal Statistical Office, 2006, p.
2). Others work in the cities but live in the rural areas. Increased development of the countryside led to higher population density in the rural areas, with an index of 100 in 1981 and close to 120 in 2004 (Swiss Federal Statistical Office, 2006, p. 2). Population density in the urban areas, however, arrived at 100 in 1981 and 114 in 2004 (Swiss Federal Statistical Office, 2006, p.
2).Aged dependency (<15 and >64) rose from 115 in 1994 to about 133 in 2004 (Swiss Federal Statistical Office, 2006, p. 2). This paper centers on the economic, political, and monetary situation of Switzerland. It asserts the fact that Switzerland, despite high and constantly improving GDP, does not appear to be a safe haven, especially for smaller investors. Their economy is in the process of dematerialization, and GDP only resulted to environmental pressure.
Main Body Economic and political situation of Switzerland • Economic situation of Switzerland.The economy of Switzerland is in the process of dematerializing, with negative direct material input (DMI) and negative percentage of DMI (Swiss Federal Statistical Office, 2006, p. 3). As stated, “Annual direct material input to the Swiss economy exceeds 100 million tons, amounting to over 14 tons per inhabitant” (Swiss Federal Statistical Office, 2006, p. 3). There is, on the other hand, stable GDP/tons domestic material consumption, and material efficiency has radically improved since the early ‘90s (Swiss Federal Statistical Office, 2006, p.
3).This however, does not conclude that improved material efficiency made its economy even better. Since the demand for materials in the tertiary sector is less than the secondary sector, and more manufactured goods have entered the country since then, it is evident that indirect flows and improved material efficiency only resulted due to the “shifting of environmental pressure abroad” (Swiss Federal Statistical Office, 2006, p. 3). Material efficiency has increased with an index of 100 in 1981 to 150 in 2004 (Swiss Federal Statistical Office, 2006, p.
3).The country is in the process of a “vigorous economic expansion (that) has allowed Switzerland to emerge from a decade of weak economic growth” (Organization for Economic Cooperation and Development, 2007, p. 1). It is in the process of a current upswing, which is believed to be only temporary, especially since there is currency depreciation and financial intermediation out of the global and domestic capital market, which is about to end. Large inflow of immigrants would most concludingly make longer-lasting contribution to the aggregate supply of the economy.
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