| Actual | Previous | Revised | |
| Balance | CHF3.036B | CHF3.841B | CHF3.897B |
Highlights
The Swiss surplus narrowed in December to a seasonally adjusted 3.036 billion Swiss Francs from a revised 3.897 (3.841) billion as exports slowed while imports remained relatively stable.
Exports fell to 22.499 billion francs from 23.549 billion in November, while 19.463 billion worth of goods came into the country in December, slightly lower than the 19.652 the month before.
The main driver behind the decline in exports was a 1.323 billion drop in chemical and pharmaceutical exports. Excluding this sector, exports were up by94 million francs in December, suggesting there has been some recovery from the US tariffs. These are now at 15 percent compared to 39 percent earlier in the year.
The strength of the Swiss franc is likely also playing some role in the pullback and exports. This is likely to continue as the US dollar continues to weaken in the face of US policies. At the same time, the strong franc is keeping imported inflation at bay.
Recently struck trade deals by the European Union with Mercosur countries and another with India are likely to have ancillary benefits for the Swiss economy as well. That, to be sure, is still down the road, but it does show that countries are beginning to realign their trade strategies.
Definition
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.
Description
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.