Europe's dismal economic performance in the second quarter of this year has led to renewed calls for the European Central Bank to pursue stimulus measures aimed at stoking inflation. The example of Switzerland, though, suggests that Europe's problems might stem more from broader economic mismanagement than from a mere lack of rising prices.
For more than four years, consumer prices in Switzerland have risen at an annual pace well below 1 percent. In 2012 and 2013, the country even experienced deflation. Yet its economy has grown at a steady pace, and is expected to expand by 2 percent this year. The unemployment rate is a low 3.2 percent.