The merchandise trade surplus widened out from December's marginally larger revised CHF1.27 billion to CHF4.74 billion at the start of the year. This was almost double the CHF2.41 billion posted in January 2023 but was just a 3-month high. Additionally, the improvement only reflected a 5.6 percent yearly fall in imports that more than offset a 5.3 percent slide in exports. Annual growth of the former has been sub-zero every month since last February.

Seasonally adjusted, the surplus stood at CHF2.84 billion, up from December's smaller revised CHF1.30 billion and the best reading since last October. However, again the increase in the black ink masked fresh contractions in both sides of the balance sheet as exports dipped a monthly 0.4 percent while imports declined fully 9.3 percent. That said, the slide in the latter was only the second since the middle of 2023 and was driven by a hefty 19.6 percent slump in chemicals and pharmaceuticals.

Still, the real trade balance improved significantly as export volumes eased only 0.4 percent versus a 4.3 percent fall in their import counterpart. This boosts the chances of a positive contribution to real GDP growth this quarter following a small negative impact last quarter.

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 seasonally adjusted measures for cash and volume.

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.