Swiss exports fell sharply in February as demand slumped in all sectors and regions, adding to recent dire news from the economy and underlining the importance of the Swiss National Banks steps to weaken the Swiss franc. Switzerland has held up better during the credit crisis than its neighbours despite huge losses at its largest banks as consumers kept spending but the recession is now spreading to more sectors, hitting domestic businesses like tourism.
Exports fell by 16.3 percent on the year when adjusted for price swings, the Federal Customs Office said. Nominal exports were 14.4 billion francs ($12.62 billion) and imports were 13.6 billon francs, taking the trade surplus to 731 million francs, less than half the February 2008 figure.
Switzerland slid into recession in the middle of last year as demand from key markets such as the United States and Germany collapsed and the SNB expects the economy to shrink by up to 3.0 percent, which would be the worst decline since 1975. The ZEW investor survey showed that a large majority of analysts saw the economy worsening over the next six months, with the indicator published by Credit Suisse and the ZEW institute ticking up only 0.6 points to -57.1 points in March. Most of the survey participants, however, had sent in their replies in before the central bank announced sweeping plans to boost the economy, Credit Suisse analyst Fabian Heller said.
The ZEW survey for Germany showed glimmers of hope for Switzerlands main trading partner, with the German ZEW index creeping up to -3.5 points, its highest level since mid-2007. A UBS survey showed that small and medium-sized enterprises are increasingly feeling the economic downturn. "Companies expectations suggest that business has declined appreciably since the start of the year," the UBS economists said.
The countrys leading travel group Kuonisaid booking levels were 24 percent lower by March 15 than a year ago, with bookings in Switzerland in its division for premium and specialist tours down 15 percent. The SNB cut its target for the 3-month franc LIBOR to a historic low of 0.25 percent and intervened to weaken the Swiss franc on March 12.
The franc, which had risen sharply since the credit crisis broke in 2007, has lost some 4 percent against the euro, the currency of Switzerlands main trading partners, after the SNBs move. But analysts warned that the currency was not the main problem for exporters.
"The SNB has intervened in the FX markets to prevent any further appreciation of the Swiss franc yet exports are likely to continue to suffer as demand from key trade partners such as Germany remains at depressed levels," said 4Cast Limited analyst Saara Tuuli. "Interest rates have clearly bottomed at 0.25 percent this year and hence the focus is now on the effectiveness of the SNBs announced unorthodox measures," she said.
All export sectors were hit, with the watchmaking industry reporting a near 29 percent year-on-year drop in real terms as consumers curb spending on Swiss timepieces. Even the crisis resilient food industry reported a 6 percent decline, with nominal exports of cheese down 16 percent and exports of chocolate down 27 percent. The slump in demand was also broad-based geographically, with demand from Europe, North America and Asia all falling with double-digit rates.