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Swiss franc’s strength, manufacturing may challenge US economic assumptions

03 June 2025 05:30

A recent article in Financial Times underscores that as debates continue over whether the US should deliberately weaken the dollar to revive American manufacturing, it’s crucial to recognise that the dollar isn’t the world’s strongest currency — that distinction belongs to the Swiss franc.  Switzerland remains one of the wealthiest nations with a thriving manufacturing sector, challenging the common belief that a strong currency undermines export competitiveness.

The Swiss franc has been a top performer over the past five decades and continues to rank near the strongest globally, even as some struggling currencies have recently regained ground against the dollar. Despite this, Swiss exports have steadily increased, reaching historic highs both as a percentage of national GDP—around 75 per cent — and global exports, close to 2 per cent.

Switzerland’s economic success highlights that currency value is just one piece of the puzzle. Like Germany and Japan in their prime, Switzerland is known for producing high-quality goods and services that command a premium worldwide under the “Made in Switzerland” label.

The country’s economy is notable for its innovation leadership, topping UN rankings for over a decade. It invests heavily in practical education, research, and development, yielding high returns. With productivity exceeding $100 GDP per hour worked, Switzerland outperforms all other major economies in efficiency.

Manufacturing accounts for 18 per cent of Swiss GDP, with more than half of exports classified as “high-tech,” more than double the US share. This focus on advanced products supports a current account surplus averaging over 4 per cent of GDP since the early 1980s, bolstered by substantial foreign investments.

While Switzerland faces challenges like high private debt, it avoids the widespread “zombie company” problem seen elsewhere. Its stable, adaptable economy continues to thrive regardless of currency swings or global economic shifts.

The Swiss model offers a critical lesson: for developed economies, competing on quality and innovation matters more than manipulating exchange rates. Devaluation risks pushing industries toward cheap, low-quality production rather than fostering long-term manufacturing strength. For nations like the US, the key lies in building resilient, innovative industries—not just weakening the dollar.

By Naila Huseynova

Caliber.Az
Views: 489

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