Explained: Why Switzerland is world’s most expensive country? (2022)

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Switzerland is world’s most expensive country. but why?

Welcome to another blog friends.

Switzerland is famous for many things like Tourism, chocolates, etc. But today, I would like to talk about Switzerland that not many would think about. Switzerland is the world’s most expensive country, You must be wondering How expensive?

Here, take a look, In the general food court of the airport where we ate some Indian food- which is 2 to 3 vegetables and rice, full-size roti that’s all. This cost us almost 40 Swiss Francs which is 3,200 Indian rupees. Can you believe guys? Another thing is If Do you want a haircut? You can get it done only for 49-50 Euros, which means around 4200 to 4500 Indian rupees.

The cost of living index was made to compare the cost of living in different cities across the world. New York was taken as the baseline while calculating this index, The cost of living index of New York is 100 and New York is counted as one of the most expensive cities in the world. There are only 6 more cities that are more expensive than New York and their cost of living index is more than New York.

All those 6 cities are in Switzerland. The cost of living of India, for comparison, is 24. The cost of living index of Zurich is the highest in the world at 131. A question arises- Why is it?

What is the reason that some countries are so expensive and some are so inexpensive? 

Why is Switzerland, especially, so expensive?

Let us start with the basics. Do you see a common pattern between the developed and the developing countries in the world today? Why are developed countries developed and why are developing countries still developing? There is a generalized theory behind this. 500 years ago, countries like India and China that are developing, in comparison with Europe.

The reason, it is said, is that humanity, at that time,500 years ago revolved around agriculture. It was the time of the Agriculture Revolution. But when the Industrial Revolution came, it started in Europe. And after the advent of the Industrial Revolution, the economy of the world started to revolve around the industries. It switched over from agriculture.

It’s the primary, secondary, tertiary sectors that we read about. The theory states that the climate was very comfortable in countries like India and China and since the land was very fertile for agriculture, the people could lead their lives easily, But the climate in Europe was extremely harsh. It used to be very cold here. The climatic and environmental conditions forced the people to innovate. this is why it is said that the Industrial Revolution began in Europe and not India or China.

Since the world economy, today revolves around the Industrial Revolution, then, the European countries obviously forged ahead.

But there’s still another question- Why is Switzerland, especially, so expensive?

We came across this while window shopping. Its cost breaks all records until now, We’ve seen so many expensive things until now. 54,000 Euros, That is, approximately, half a crore rupees. Yeah, that’s like an average person’s yearly salary in Germany. Someone who us an engineer, maybe and two-level salary of an engineer per year would be around 50,000.

What are the things Switzerland is famous for?
Their luxury watches, chocolates, highly developed tourism sector, etc.

What is common amongst all of them?

All of them are final-end products that are highly valued. Switzerland exports all of them to other countries. In comparison, what does India export to the other countries? Agricultural products So, it is obvious that you will not get as much money by exporting agricultural products. as you would by exporting luxury, high-quality products to the other countries So, this is one reason But you could say that going by this logic, all the European countries should be more expensive. What makes Switzerland more expensive than the rest of the European countries as well?

There are numerous expensive reasons for this. If you want to see and know more about Switzerland, According to statistics, Switzerland has the highest per capita of millionaires that amounting to 11.8% of their adult population. That is every 10th person you come across on the street, statistically, is a millionaire Imagine that…

This is where lies the specialty of Switzerland. It’s not that all the millionaires are being born in this country by chance, This country attracted millionaires towards itself.

What is the reason that rich people from across the world want to come to Switzerland?

There are several reasons for this as well, One reason is that the tax here is very low. The country does not charge so much for businesses. So, what is the tax rate here? The VAT rate of Switzerland is one of the lowest in the world. It is around 8% on most of the things. It is around 7.7% when you go eat in a restaurant. It is 3.8% for accommodation and services, and merely 2.5% for the basic necessity items.

Compare it with your GST. Let us look at a small comparison between Delhi and Zurich

Where are the things costlier and by how much? Eating a normal dinner in a common restaurant costs 300 rupees in Delhi and 2000 rupees in Zurich. Similarly, the cost of a one-way ticket transportation cost is 30 rupees in Delhi and 300 rupees in Zurich. that’s almost 10 times the cost.

The basic electricity cost is 4,000 rupees in Delhi. For an 85 sq kilometer apartment in Zurich, it is 16,000 rupees. Take a look at the rent. If you want to rent a one-bedroom apartment in the City Centre in Delhi, It would cost around 18,000 rupees while in Zurich, it would cost more than 1 lakh 50,000 rupees. The average salary of the people in Delhi is 38,000 rupees. In Zurich, it is more than 5 lakh rupees per month.

So, it is no wonder that so many people here are millionaires. And if the country is so expensive- they get a huge advantage, Whenever they go visit another country, they will always find things to be cheaper there, For the people living in Zurich, it is very cheap to travel around the rest of the world due to this. This is a huge advantage of living in an expensive country if you are earning in the same currency.

The second reason is that their banks are very safe. They have remained highly popular historically for the people who wanted to export their money out of their countries and indulge in money laundering. You must already be aware of Swiss banks. So, their banks have enjoyed a high reputation historically.

The third and most important reason is that Switzerland is a country that has remained safe and stable historically. And all the rich people, obviously, would want to live in a stable country. They would not want to live in a country where there is an ongoing fight or where the people are killing each other in the name of faith and there are riots all over uselessly.

What did Switzerland have? Compared it with Germany

When Germany was being ruled by a dictator 60-70 years ago, all these countries were involved in a world war. So, all the millionaires of Europe came to live in Switzerland because it was the only safe and neutral country.

What effect would the flocking of millionaires have on the economy of the country?

Look at these shops nearby. Imagine that millionaires came and settled in the vicinity The shopkeepers would obviously think that they can sell their goods at higher prices because since there are so many rich people living in and around that they would buy them. So they would raise the prices of the different products in their shops. The rent price would also increase. Since the millionaires can afford to pay more, the landlords would charge more rent. So, basically, if so many millionaires live in the same place, the cost of living of that place would automatically go up as per the basic principle of economics.

The cost of a living index would be more at places where more rich people live. The same logic is applicable in the rest of the cities and the rest of the countries. Take the example of New York city. All of Hollywood wants to come live in New York and this is why New York is one of the most expensive cities in the world. Take the example of our very own Mumbai. Since a lot of Bollywood lives in Mumbai, the cost of living in Mumbai is much higher in comparison with the rest of the cities of India.

So, If you want to save up money, go and live in places where the rich people don’t want to live. You will save up on a lot of money there because the cost of living would be quite low. So, these are the reasons why Switzerland is the world’s most expensive country.

Thank you…

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