Exports from Switzerland fell for the second month in a row in April as the strong Swiss franc took its toll and European demand shrank, with even sales of watches setting a less scorching pace. Exports fell a real 3.9 percent to 15.23 billion Swiss francs ($15.96 billion), the Federal Customs Office said on Thursday, while the trade surplus narrowed to 1.334 billion francs.
"Only the watch and chemical-pharmaceutical industries managed to remain in the plus zone. But the watch sector lost notable momentum compared to the previous, very dynamic, development," the customs office said in a statement. Watch exports growth slowed to 9 percent, to 1.69 billion francs, compared to an average growth rate of 16.1 percent for the first four months of the year.
Strong Asian demand for luxury watches has helped companies like Swatch and Richemont to sail relatively unscathed through the economic turmoil. "Strong sectors are weakening, clearly there is a fallback in momentum in exports, but we still have to be very cautious, April is a difficult month," said Julius Baer economist Janwillem Acket, noting an Easter effect on sales in the month.
"I would not be too bearish, the fact we have a weakening of data is not astonishing given the strength of the Swiss franc. Watches and pharma are holding up quite well." To ward off a recession, the Swiss National Bank capped the franc at an upper limit of 1.20 per euro last September, but the Swiss currency is still nearly 30 percent stronger than it was before the financial crisis broke out in 2008.
"Even though the fair EUR/CHF exchange rate is increasingly moving in the direction of 1.20 due to the enduring inflation differential, export companies are still complaining about competitive disadvantages," said Bernd Hartmann, head of investment research at VP Bank.
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