Economist Werner Fontebel
Shava, Shafa – minus
Last year, Switzerland ran a surplus of 73 billion Swiss francs – and still lost 223 billion Swiss francs. We save ourselves.
95.2 billion francs! The National Bank’s record loss in the past six months has made headlines. But this number can be easily exceeded if we look at the whole of Switzerland rather than the national bank. According to the latest data from the National Bank, Switzerland has achieved a current account surplus of 73 billion Swiss francs in the past four quarters (until the first quarter of 2022), but its net foreign assets did not increase by this amount, but by a decrease of at least 223 billion Swiss Franc. A net loss of nearly 300 billion – three times the loss of the Swiss National Bank.
surely. It has been an exceptional year and our foreign assets have always been subject to significant fluctuations. Do not panic. However, an unfavorable long-term pattern has been confirmed: our hard-earned surpluses are wiped out time and time again due to the depreciation of our assets. This also applies to the past ten years, for example. Despite a cumulative surplus of 520 billion, net wealth has fallen by about 100 billion. This results in a negative annual return on assets of approximately 6 percent. Even if we compare the highest level of assets to date of 874 billion with the values of the previous ten years, the final accounts do not look good: cumulative surpluses of 513 billion francs only increased net assets by 110 billion. Here, too, the return on assets is clearly trending in the red.
Chronic surplus country
Where does it come from? Well, on the one hand, as a country with chronic surpluses, we are forced to get our balances primarily with countries that frequently run current account deficits. Balances with doubtful debtors tend to be impaired. There is also a significant leverage effect: Switzerland’s current foreign assets of 652 billion francs are the difference between 4,889 billion in debt and 5,541 billion in assets, of which 5,000 billion are good in foreign currencies. This means that every time the franc rises 1% against foreign currencies, net worth (much smaller) shrinks by about 7.5%.
However, this is not the result of bad investment policy, but ultimately a reflection of our economic relations with other countries. All other chronic surplus countries also suffer from the fact that their assets are repeatedly declining. Sometimes just slowly and now again very quickly. An analogue is the United States of America, which has accumulated a deficit of about 5 trillion billion in ten years without significantly reducing its net foreign assets.
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