* Swiss exports drop 21 percent year-on-year
* Trade balance surplus remains stable at 2 bln Swiss francs
* Analysts see bottom in H2, as key markets stabilise
By Sven Egenter
ZURICH, June 23 (Reuters) - A sharp decline in Swiss exports gathered speed in May and imports fell even faster, data showed on Tuesday, showing the Alpine economy was still far away from recovery.
Exports dropped nearly 21 percent on the year when adjusted for price swings and were over 7 percent lower than in April, the Federal Customs Office said.
"There is no light at the end of the tunnel," the office said in a statement. "Seven out of 10 export sectors saw demand tumble between 22 and 39 percent on the year."
The trade balance, however, still showed a surplus of some 2 billion Swiss francs, as nominal imports declined even faster then nominal exports, reflecting shrivelling domestic demand.
The slump in exports has already dragged the Swiss economy deep into the red: the economy shrank by 0.8 percent in the first quarter, with exports dropping over 5 percent.
The Swiss National Bank said in its quarterly policy assessment that the export decline should slow in the second quarter but that overall risks were clearly to the downside.
The central bank, which has stuck to its full arsenal of unconventional measures to boost the economy, expects gross domestic product to shrink by 2.5 to 3.0 percent in 2009.
The trade data showed weakness across all sectors: Demand for metal goods dropped nearly 40 percent on the year in nominal terms. The machinery and electronics industry saw exports falling 30 percent.
Even the food and chemicals industries -- which have shown resilience so far -- saw demand falling by nearly 4 and 6 percent respectively.
"Trade is weakening strongly," said Credit Suisse analyst Fabian Heller. "There is no sign of an improvement."
However, many analysts share the SNB's view that exports should stabilise.
"We should see first signs of a turnaround or a bottoming out in the second half of the year," Heller said. "International indicators are rather encouraging," he said. "Order intake in the PMI survey for example sent positive signs."
In Germany, Switzerland's single most important export market, the Ifo business survey showed an improvement in companies' mood for a third month in a row and many economists interpret this as a sign of a turnaround. (Reporting by Sven Egenter, editing by Mike Peacock)