The Credit Suisse export barometer, which records foreign demand for Swiss products, stands at a level of -0.86 in the fourth quarter of 2012 – slightly higher than in the third quarter of 2012 (-0.92). It has therefore stabilized above the growth threshold of -1.

Having fallen again from 60.2 to 55.2 points between the second and third quarters of 2012, the Osec SME export prospects indicator has also stabilized and now stands at 56.3 points. This figure is calculated from the export sentiment of SMEs for the fourth quarter of 2012, as well as effective exports in the preceding quarter. The SME export prospects indicator is therefore pointing to a slight rise in exports, given that the growth threshold lies at 50 points on a scale from 0 to 100. 34.5% of SMEs expect exports to grow over the coming quarter, 45.9% anticipate stagnation in the volume of their exports, while 19.6% fear declining exports.

Electrical Engineering Is Growth Engine
The picture is more positive if we look at expectations for the individual sectors. While only three out of eight sectors questioned by Osec – services, precision instruments, and chemicals/pharmaceuticals – saw themselves as being on a growth trajectory at the beginning of the third quarter of 2012, this number had risen to five by the start of the fourth quarter: They are led by electrical engineering, which anticipates significant growth, followed by the chemicals/pharmaceuticals industry, consumer goods, services, and paper, which have more modest expectations. The other sectors anticipate a decline for the fourth quarter of 2012.

The companies that expect higher exports over the coming months, according to Osec, attribute this above all to greater marketing. This was cited in 51% of cases, versus 43% in the preceding quarter (multiple answers possible). 46% of SMEs gave product innovation as a reason, compared with 49% in the preceding quarter.

The optimism of the electrical engineering sector tallies with the results of the Credit Suisse export barometer. Here too, the sector is credited with above-average export prospects. Expectations for the precision instruments industry are likewise positive. On the other hand, this coming quarter looks rather subdued for the paper and metal industries.

Strong Swiss Franc Less of a Worry
The exchange-rate problem has eased slightly: At the start of the fourth quarter of 2012, 64% 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 70%. The service sector, in which only 41% of firms surveyed expect a negative influence, is looking especially resilient. The metal industry and the machinery sector are especially sensitive about exchange-rate developments, with 80% and 57% of SMEs respectively expecting a negative influence.

79% of the SMEs surveyed stated that the strong franc was adversely affecting their profit margins. In the preceding quarter it was 81%. Pressure on margins was especially pronounced in the metal industry (100%), precision instruments industry (91%), and electrical engineering sector (89%). The 21% 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.

Growth Fillip from Emerging Markets and US
According to the Credit Suisse export barometer, the emerging-market countries are expected to be the biggest growth driver for the Swiss export industry. This is led by India, Russia, and Turkey, while prospects on the Chinese market are weakening. The US is now above the growth threshold once again.

Notwithstanding both the strength of the Swiss franc and the euro crisis, Europe remains by far the most important destination region for Swiss exports. 91% of the Swiss SMEs surveyed by Osec intend to export to Europe over the coming six months, versus 94% in the preceding quarter (multiple answers possible). The most important European export market is still Germany, to which 80% of the SMEs surveyed export their goods or services (preceding quarter: 79%). This is followed by France, which is mentioned by 51% (56%), Austria, with 47% (52%), and Italy, with 40% (49%). Germany was therefore able to retain its position, while the other neighboring countries lost significance – in some cases significantly.

Asia – the second most important destination for Swiss exports – has made slight gains again. 54% of Swiss SMEs will export to the Asia-Pacific region in the next six months (previous period: 51%). China remains the most important destination for exports in Asia with a share of 34%. This is followed by India, with 27%, and Japan, with 22%. 44% (42%) of SMEs are likely to export to North America in the coming six months, 34% (28%) to the Middle East/Africa region, and 20% (23%) to South America.

Methodology of the Credit Suisse Export Barometer
The Credit Suisse export barometer takes as its basis the dependence of Swiss exports on foreign export markets. 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 approximately 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. The export barometer consolidates this information to produce 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), External Trade Switzerland – Facts and Trends, Swiss Issues: Industries, available at www.credit-suisse.com/research.

Methodology of 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. To emphasize the forecast nature of the SME export indicator, expected export activity in the following quarter is weighted at 60%, with exports in the current quarter being weighted at 40%. 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.