✂ Fed’s first rate cut since 2020: Use our free Stock Screener to find new opportunities fastExplore for FREE

UPDATE 2-Swiss econ outlook gloomy as export slump continues

Published 03/19/2009, 09:13 AM
CSGN
-
UBSN
-
TGT
-

* February Swiss exports drop 16 percent year-on-year

* Investors still gloomy on outlook

* More sectors suffering as recession spreads

(Adds survey on small/mid caps, company background)

By Sven Egenter and Katie Reid

ZURICH, March 19 (Reuters) - 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 Bank's 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 Switzerland's 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 country's leading travel group Kuoni said 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.

CHEESE, CHOCOLATE

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 Switzerland's main trading partners, after the SNB's 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 SNB's 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. (Editing by David Stamp; Editing by Victoria Main)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.