CH: Merchandise Trade Balance

Tue Feb 20 01:00:00 CST 2018

Actual Previous Revised
Trade Balance level CHf1.32B CHf2.63B CHf3.37B

The merchandise trade balance was in a E1.32 billion surplus in January, down from an upwardly revised E3.37 billion in December. January is seasonally a poor month for the surplus but this was the least black ink since 2012.

The deterioration reflected a 4.2 percent yearly decline in nominal exports, a sharp reversal from December's 5.6 percent advance. In real terms they declined an even sharper 5.1 percent following a 3.3 percent gain. By contrast, nominal imports were 7.5 percent stronger after a 0.4 percent annual drop last time. Volumes were up 3.8 percent following a 1.0 percent rise last time.

Large seasonal effects always complicate the interpretation of the January data. However, import growth looks to be accelerating in line with improving domestic demand and, despite the absolute fall, the trend in exports remains positive enough. If sustained, CHF losses last year should help to bolster export volumes over coming quarters.

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.