CH: Merchandise Trade Balance

Thu May 28 01:00:00 CDT 2015

Actual Previous Revised
Trade Balance level CHf2.86B CHf2.53B CHf2.50B

The merchandise trade balance returned a CHF2.86 billion surplus in April, up from a marginally smaller revised CHF2.50 billion in March.

The headline improvement reflected a 4.4 percent annual decline in exports that was more than offset by a 7.3 percent slump in imports. However, price volatility had a major impact on both series and in real terms, exports were down just 0.6 percent after a 0.6 percent increase last time while import growth slowed from 4.8 percent to 0.1 percent.

Seasonally adjusted, export volumes rose 0.2 percent on the month after a 1.0 percent rise at the end of last quarter while real imports followed a 2.5 percent drop in March with an even steeper 3.0 percent slide.

Today's data suggest that Swiss exporters have responded well to the sharp appreciation of the CHF but the weakness of domestic demand is highlighted by the sluggishness of imports. This should be reflected in tomorrow's first quarter GDP accounts.

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.