CH: Merchandise Trade Balance

Thu Mar 19 02:00:00 CDT 2015

Actual Previous Revised
Trade Balance level CHf2.47B CHf3.43B CHf3.41B

The merchandise trade balance returned a CHF2.47 billion surplus in February, down from a marginally smaller revised CHF3.41 billion in January.

Both sides of the balance sheet were weak with exports falling 3.1 percent on the year (also minus 3.1 percent in volume terms) and imports percent declining 4.5 percent (minus 1.3 percent) on the back of sharply lower energy costs.

Seasonally adjusted export volumes dropped 3.2 percent versus January to provide early warning signs about the threat to competitiveness of the appreciation of the local currency. By contrast, real imports were up 3.1 percent over the same period.

It will take time for the full impact of the exchange rate's climb to filter through into the trade data. However, if February is anything to go by Swiss exporters are in for a very difficult year.

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.