CH: Merchandise Trade Balance

Thu Nov 19 01:00:00 CST 2015

Actual Previous Revised
Trade Balance level CHf4.16B CHf3.05B CHf3.25B

The merchandise trade balance was CHF4.16 billion in the black in October following a larger revised CHF3.25 billion in September.

The sizeable improvement reflected mainly weaker imports which fell 6.7 percent on the year although a 0.4 percent rise in exports also made a small positive contribution. The difference in volumes was less marked but still significant with exports up 3.8 percent and imports 0.1 percent lower.

Compared with September, nominal exports were 5.1 percent higher and imports 3.3 percent better off while volumes were up 5.4 percent and 3.5 percent respectively.

Today's data suggest that net exports provided the economy with a useful boost at the start of the fourth quarter. However, growth is still likely to remain sluggish for some while and with the ECB widely seen easing again in December, additional monetary accommodation from the SNB is probably not very far away.

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.