The Credit Suisse export barometer, which records foreign demand for Swiss products, currently stands at a level of -0.92 (previous quarter: -0.33). This puts it only marginally above the growth threshold of -1. The growth in Swiss exports is therefore likely to come to a standstill during the next quarter.

At the same time, the Osec SME export prospects survey shows a dimming of export sentiment: It currently stands at 55.2 points, compared with 60.2 points in the preceding quarter. This figure is calculated from the export sentiment of SMEs for the third quarter of 2012, as well as effective exports in the preceding quarter. Despite the decline versus the previous quarter, the SME export prospects survey is still pointing to a slight rise in exports given that the growth threshold on this scale from 0 to 100 is 50 points. 34.5% of the Swiss SMEs that responded expect exports to grow in the coming quarter, compared with 38.0% in the preceding quarter. 45.9% expect the volume of their exports to stagnate; this compares with 50.5% at the start of the second quarter of 2012. What's more, every fifth SME (19.6%) now fears a decline in exports compared with just over one in 10 (11.5%) in the preceding quarter.

Marked Differences by Sector
The metals industry, as well as electronics and precision instruments, still enjoys above-average export prospects, according to the Credit Suisse export barometer. The paper products industry continues to exhibit the most subdued prospects.

Whereas all sectors with the exception of paper products were still expecting exports to grow in the second quarter of 2012 according to the Osec export prospects survey, the SMEs are now considerably more pessimistic. Just three sectors – services, precision instruments, and chemicals/pharmaceuticals – expect to remain on a growth trajectory. The other sectors anticipate a decline for the third quarter – particularly machinery; however, the paper products industry and the consumer goods sector also expect a significant decline in exports.

Those SMEs expecting higher exports attribute this above all to product innovation. This was cited in 49% of cases, versus 52% in the preceding quarter (multiple answers possible). 43% cite increased marketing as a reason, compared with 49% in the preceding quarter. Not surprisingly, the "recovery in the economic situation" factor has lost considerable significance; it was mentioned in just 19% of cases compared with 25% in the preceding quarter. SMEs that expect a decline in exports now attribute this primarily to the economic downturn: 56% named this as a factor, compared with 42% in the preceding quarter. As a result, the "competitive pressures" factor was pushed into second place with just 44% of mentions compared with 54% in the quarter before.

Worries About Strong Swiss Franc Returning to the Fore
SMEs are again expressing increasing concerns about the currency issue: At the start of the third quarter of 2012, 70% of the companies in the Osec SME export prospects survey expect the growth in their exports to slow as a result of the strong Swiss franc. In the preceding quarter it was 64%. The machinery sector and the metals industry are especially sensitive about exchange-rate developments, with 86% and 83% of SMEs respectively expecting a negative influence. The service sector, in which only 45% of firms surveyed expect a negative influence, is looking fairly resilient.

81% of the SMEs surveyed stated that the strong franc was adversely affecting their profit margins. In the preceding quarter it was 75%. In the metals industry, all SMEs surveyed indicated that they expect pressure on margins. Pressure on margins was also pronounced in the chemicals/pharmaceuticals industry (91%), electrical engineering (85%), the precision instruments industry (84%), and paper products (82%). The 19% of SMEs that were not concerned about any negative impact on profit margins said the main reason was that they were able to impose price increases or conduct hedging operations.

Asia and North America Losing Traction
According to the Credit Suisse export barometer, the export prospects of Swiss SMEs have deteriorated throughout the world. Whereas in the preceding quarter a positive impetus continued to be expected from the US, signs of growth are now confined to just a few emerging-market countries, such as Turkey, Russia, and India.

Notwithstanding both the strength of the Swiss franc and the euro crisis, Europe remains by far the most important destination region for Swiss exports. 94% of the Swiss SMEs surveyed by Osec intend to export to Europe in the second half of 2012, versus 95% in the preceding quarter (multiple answers possible). Asia – the second most important destination for Swiss exports – is set to lose significance, however. 51% of Swiss SMEs will export to the Asia-Pacific region in the next six months (previous period: 56%). China remains the most important destination for exports in Asia; nevertheless, its share of mentions is significantly below that of the preceding quarter at 30% versus 37%. 42% of SMEs are likely to export to North America in the coming six months, 28% to the Middle East/Africa region, and 23% to South America.


Methodology Credit Suisse export barometer
The Credit Suisse export barometer takes as its basis the dependence of Swiss exports on foreign export mar-kets. In constructing the export barometer, we have drawn together important leading industry indicators in Switzerland's 28 most important export countries. These indicators generally have a forecast horizon of roughly one to two quarters. The values of these leading indicators are weighted on the basis of the share of exports that goes to each country and are consolidated to form a single indicator. Since the values in question are standardized, the export barometer is calibrated in standard deviations. The zero line corresponds to the long-term average growth in Swiss exports of 4.8% since 1985. Accordingly, the growth threshold lies below the zero line at around -1.

For more detailed information: Credit Suisse (2009), Swiss Foreign Trade – Facts and Trends
Swiss Issues Sectors, available at www.credit-suisse.com/research

Osec SME Export Outlook Indicator
The SME export outlook indicator is based on the quarterly survey of a fixed panel of more than 200 Swiss SMEs representing the pharmaceuticals/chemicals industry, machinery, consumer goods, the metals industry, paper, electrical engineering, the precision instruments industry, as well as services. SMEs indicate whether they expect growth, stagnation or a decline in exports for the current quarter as well as the coming one. The SME export indicator can range from 0 to 100, whereby figures between 0 and 50 show an expected decline in exports and figures of 50 to 100 an expected rise in exports. Participants provide further information on export volumes, for instance the reasons for a change in their export volume, export markets, etc. This information gives an accurate picture of the export activities of Swiss SMEs.