CH: Merchandise Trade Balance

Tue Feb 03 01:00:00 CST 2015

Actual Previous Revised
Trade Balance level CHf1.52B CHf3.87B CHf3.80B

The merchandise trade surplus saw its usual hefty seasonal decline at year-end. At CHF1.52 billion the black ink was nearly CHF2.3 billion short of its November mark and the smallest since August.

Despite December's narrowing, the fourth quarter surplus stood at CHF8.51 billion, up from CHF7.73 billion in the previous period and easily the strongest performance in 2014. Calendar year black ink of CHF30.02 billion was also some 27 percent above the 2013 outturn.

Adjusted for differences in working days, fourth quarter nominal exports rose 4.9 percent on the year while volumes were up 0.5 percent. The comparable figures for imports were minus 2.6 percent and minus 4.1 percent respectively. Versus the third quarter real exports rose 0.2 percent but imports fell 0.8 percent.

The latest trade data underline how well Swiss exporters coped with a strong local currency last year. However, 2015 will prove a much sterner test due to the sharp additional appreciation of the CHF prompted by January's abandonment by the SNB of it lower target floor for EUR/CHF.

Merchandise trade measures the difference between the total value of Swiss exports and imports. Due to its small population and limited resources, foreign trade is very important for the Swiss economy and trade statistics can have a significant impact on markets. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production. The focus is on the balance of trade in goods, excluding precious metals, gemstones, works of art and antiques. This is provided in unadjusted and workday adjusted measures for cash and volume. Seasonally adjusted monthly figures are not released so comparisons are usually made with reference to the year ago data.

Changes in the level of imports and exports along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect the value of the Swiss franc in the foreign exchange market. Switzerland's major trading partners include Germany, France, Italy and the United States. While Switzerland still exports large amounts of traditional products such as chocolate and watches, more than half of Swiss exports are in mechanical and electrical engineering and chemicals today. A positive trade balance indicates a trade surplus while a negative balance represents a trade deficit. Trade surpluses indicate that foreigners are buying more Swiss goods, which are typically paid for in Swiss Francs. This translates into greater demand for the currency and upward pressure on the value of the Franc. However, if the balance is a deficit, Swiss consumers are buying goods from trading partners which translates into higher demand for foreign currencies placing downward pressure on the value of the Franc.