CH: Merchandise Trade Balance

Thu Apr 23 01:00:00 CDT 2015

Actual Previous Revised
Trade Balance level CHf2.53B CHf2.47B CHf2.32B

The merchandise trade balance returned a surplus of CHF2.53 billion in March, up from a slightly smaller revised CHF2.32 billion in February.

The monthly improvement made for a first quarter surplus of CHF8.18 billion, down from CHF8.43 billion in the previous period but CHF1.23 billion above its outturn a year ago. Nominal exports fell 0.6 percent on the year and were 0.9 percent weaker in real terms. Cash imports declined a much steeper 3.5 percent but were 1.7 percent higher when expressed in volumes.

The deterioration in real net exports comes as little surprise in the wake of the sharp appreciation of the local currency since mid-January. More of the same is to be expected this quarter although signs of declining domestic demand should help to limit the damage. Nonetheless, having lost so much competitiveness Swiss exporters face a particularly difficult period and current and expected weakness here raises a real risk of a Swiss recession in 2015.

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.