ZURICH, Nov 20 (Reuters) - Swiss exports fell sharply in October in the latest sign that the global economic downturn, particularly in the euro zone, is taking its toll and adding to the Swiss National Bank's case for cutting interest rates again.
Exports were 4.6 percent lower than the previous month after taking into account price swings and seasonal factors, the Federal Customs Office said on Thursday, while exports tumbled 8.1 percent versus the year-ago period in real terms.
Switzerland ran a merchandise trade surplus of 1.84 billion Swiss francs ($1.53 billion), versus 1.46 billion francs in September, as exports stood at 18.2 billion francs and imports at 16.4 billion.
"The trade surplus as such remains high, but this is due to a bigger decline in imports than exports," said Credit Suisse analyst Fabian Heller. "What is striking is that exports to the euro zone, which account for more than 60 percent of total exports, went into negative territory year-on-year. This reflects the slow dynamics in the euro zone."
Exports to the European Union fell 6.4 percent, compared with a 3 percent rise to the rest of the country's trading partners.
Last week, data showed that Swiss input price inflation eased again in October, allowing the SNB to focus on the country's deteriorating growth outlook.
The three-month Swiss franc LIBOR has fallen to slightly below the SNB's target of 2.00 percent in recent days, giving the central bank even more leeway to cut rates.
"This is yet another piece of data that shows the slowdown Switzerland is facing. We are braced for further rate cuts. We expect a 50 basis point cut in December," Sarasin analyst Jan Poser said.
The SNB cut borrowing costs for the second time in a month earlier in November and is expected to reduce them further to fight the economic slowdown.
When the central bank announced the Nov. 6 cut, it said the global economic outlook had deteriorated more severely than anticipated and that Swiss GDP might even fall in 2009.
(Reporting by Katie Reid in Zurich; editing by David Stamp)