CH: Merchandise Trade Balance

Thu Jul 20 01:00:00 CDT 2017

Actual Previous Revised
Trade Balance level CHf2.81B CHf3.40B CHf3.38B

The merchandise trade balance was in a CHF2.81 billion surplus in June, down from a marginally smaller revised CHF3.38 billion in May.

Exports were 6.2 percent higher on the year in nominal terms while volumes were 3.4 percent stronger. These figures compare with respective outturns of 7.8 percent and 5.5 percent in May. Nominal imports gained 12.9 percent versus June 2016 with volumes up a more modest 5.2 percent.

However, seasonally adjusted both sides of the balance sheet contracted as exports declined 0.9 percent from their May level and imports fell 0.2 percent. Equivalent volume figures were minus 1.2 percent and minus 0.5 percent respectively.

The June outturn puts the second quarter black ink at CHF8.0 billion, a decline of nearly 6 percent from a year ago. However, this reflects a faster pace of import growth and so should not necessarily be seen as indicative of problems with CHF overvaluation.

The merchandise trade balance measures the difference between the total value of Swiss merchandise exports and imports. 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 changes are also available for total exports and imports.

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.