CH: Merchandise Trade Balance

Tue Apr 24 01:00:00 CDT 2018

Actual Previous Revised
Trade Balance level CHf1.77B CHf3.14B CHf3.08B

The unadjusted merchandise trade balance was in a CHF1.77 billion surplus in March, down from a marginally smaller revised CHF3.08 billion in February. Seasonally adjusted, this put the black ink at CHF6.46 billion for the first quarter, an CHF8.8 billion contraction versus the fourth quarter of 2017 and the smallest surplus in more than four years. Both sides of the balance sheet hit new record highs.

Adjusted exports rose just 0.2 percent on the quarter after a 3.4 percent spurt at the end of last year. By contrast, imports were again strong, rising some 4.1 percent following a 4.8 percent jump last time. The real trade balance also deteriorated as exports fell 1.8 percent, their first decline since the fourth quarter of 2016, and imports expanded a further 2.0 percent.

The foreign trade update does not bode well for first quarter GDP growth. Although the buoyancy of imports is consistent with strengthening domestic demand, the weakness of exports suggests, at best, only a limited contribution from total net exports.

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.