Switzerland's exports rose in July from the previous month, widening the trade surplus and giving some hope for recovery in the second half of 2009, but lagging imports suggested a slower pickup in domestic demand. The trade balance posted a surplus of 2.35 billion Swiss francs ($2.18 billion) in July, up from 1.5 billion francs in June, the Federal Customs Office said on Thursday.
Exports rose to 16.3 billion francs from 14.9 billion in June, but were still down by a real 15 percent on the year. "The July trade balance came in much better than expected, with a jump in real exports offsetting a further fall in real imports," 4Cast Limited analyst Saara Tuuli said. "With the Swiss domestic economy nonetheless expected to continue to deteriorate in the second half of this year, we expect the SNB to keep policy accommodative for the foreseeable future." The Swiss National Bank has said it expects gross domestic product to shrink by up to 3 percent this year, which would be the worst decline since 1975.
Despite signs of a recovery in exports, the Federal Customs Office statement said six out of 10 export sectors suffered falls in volumes of between 22 and 35 percent and trade with the European Union fell by a fifth in both directions. Demand for Swiss watches declined 26 percent in July, but recovered slightly from the 32 percent fall the previous month. Import prices also declined noticeably, it said.
Bank Sarasin analyst Ursina Kubli said the SNB still saw deflation as a major risk and would also continue its foreign exchange interventions, though the economy was likely to begin recovering. "We think the economy will recover over the next half year," said Kubli. "Also exports to Germany are recovering and that bodes well for Switzerland as Germany is an important market for Swiss exporters."