According to the Big Mac Index, an indicator used by The Economist magazine to compare prices, the famous hamburger in Switzerland turned out to be the most expensive in the world
As NashaGazeta.ch notes, the price of an American Big Mac in The Economist’s ranking is traditionally taken as the starting point, on the basis of which proponents of the “Big Mac” economy believe that the real exchange rate of this currency pair should be CHF 1.31:1 USD, while today at exchange offices one dollar costs 1.01 francs. Thus, based on prices from the menu of the globally widespread fast-food chain, one can say that the Swiss franc is overvalued by 30%. However, this situation is not new for the Confederation’s currency: in previous years the gap fluctuated between 50-70%, and in 2011 Swiss Big Macs were almost twice as expensive as American ones.
At the other end of the ranking are Venezuela, as well as two post-Soviet countries included in the list – Russia and Ukraine. According to The Economist, in Venezuela a Big Mac costs $0.66 (that is, in the realities of the “Big Mac” economy, the local currency is undervalued by 86.5%), and in Russia – $1.53 (meaning the ruble is undervalued by 69%); a similar situation occurs in Ukraine, both in the price of the hamburger and, accordingly, in the exchange rate.
“Does this mean that goods Made in Russia will become ubiquitous? If only a currency depreciation could stimulate exports, then yes,” The Economist notes, adding that this statement is only true for those industries whose products have already found buyers abroad and are selling successfully. The rest will need to first attract investment in order to be able to produce goods for export.
However, perhaps the exchange rates USD/RUB=23.12 or USD/UAH=7.30 do not seem realistic enough to everyone, so another Big Mac ranking by The Economist has been compiled taking into account the GDP per capita of the country. This calculation is fairer because it takes into account the cost of labor, the costs of attracting which inevitably affect the final price of the product. In addition, the purchasing power of the population differs significantly across countries: for some, a trip to McDonald’s is an expensive treat that can only be afforded on holidays, while elsewhere a Big Mac is just one of many ways to have a cheap snack on the go.
According to the adjusted indicator, the price of a Big Mac is most inflated in Turkey, where it costs $3.41. Switzerland ranks only fifth in this classification, with the franc overvalued by only 2.6% in this case. The still undervalued (but now “only” by 52%) currency and the world’s most affordable hamburger are in Russia. It should be noted that in its calculations presented last week, The Economist used the current market exchange rate USD/RUB=74.66.
Whether to take the “Big Mac” economy seriously or simply enjoy the cheapest Big Macs on the planet is for everyone to decide for themselves, including based on their own culinary preferences. For many, it is just a fun ranking in which Switzerland once again came out on top – that is precisely why it caught our attention in the first place.