Il bilanciamento tra prezzo e valore reale è il sale del mercato

BAK Economics: “No strong inflation in Switzerland…”

Rising prices are causing unease and concern, but the Basel, Zurich and Lugano-based institute believes the fears are unfounded, especially in the short term

The current price increases are to be interpreted positively as global demand has resumed strong growth. This has brought the prices of many goods and services, which had fallen massively during the pandemic, to a level considered more “normal”.
This is the thesis of BAK Economics, a prestigious Swiss institution with offices in Basel, Zurich and Lugano, which cites the price of oil as an important example of these effects.
Despite this, the recovery process is nevertheless beset with obstacles. For a variety of reasons, supply in many countries is currently unable to keep pace with the high demand for goods and services.

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Cataste di legno pronte per essere vendute
Stacks of wood ready to be sold

Timber and hospitality sectors “taken by surprise

The pace of global recovery has taken many producers “by surprise”, as in the case of timber production or the hospitality sector. In the hospitality sector, supply is still very limited compared to actual capacity due to the pandemic.

In addition, there are specific events that could be described as “unfortunate”, such as the merchant ship stuck in the Suez Canal or the fire in a large Japanese chip factory, which are both delaying the production of various products in high demand and further exacerbating excess demand.
Inflation becomes particularly dangerous when expectations also shift significantly upwards and set in motion a self-reinforcing price/wage spiral that can only be slowed by a painful tightening of monetary policy.

L'inflazione è un fenomeno da studiare e calmierare
Inflation is a phenomenon to be studied and controlled

Deflationary counterforces are already counterattacking

It is true that these processes are currently leading, in some countries, to significantly higher inflation rates than those to which we have been accustomed in recent years, but this phenomenon should be considered as temporary and not sufficient to bring inflation expectations to a level that is no longer compatible with price stability. Deflationary counterforces are having a strong impact.
Think, for example, of the global economy, which despite recovery is only slowly returning to full capacity, unemployment, which is still well above its pre-crisis level, and continued intense global competition.

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La pandemia metterà in difficoltà l'economia nel 2020 e 2021
Pandemic will challenge the economy in 2020 and 2021

More expensive goods and services? They are an incentive to invest

Dynamic market processes are also themselves helping to correct several mechanisms. Rising prices provide incentives for investment and market entry, so that demand swings will soon be reduced on the supply side as well.
In any case, the issue of inflation should not be underestimated, especially in the medium and long term.
Sooner or later, the public debt, which increased sharply during the pandemic, and the liquidity injections by the central banks will have to be covered.
The inflation tolerance of many countries has increased, while inflation expectations, currently still stable, could be put to the test in the coming years, particularly in the USA and the Eurozone.

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Un mucchio di franchi svizzeri di piccolo e di grande taglio
A pile of small and large Swiss francs

Beware of falling demand and the rising Franc

This scenario would also be problematic for Switzerland, even though the inflation risk in the Confederation remains low.
However, inflation-linked demand collapses in other countries and a franc that is likely to strengthen significantly again represent a serious risk for the Swiss economy.

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L'inflazione può essere un serio pericolo per l'economia reale
Inflation can be a serious danger to the real economy
bureaucracy franc Income Inflation price SME Switzerland taxation tax competition