About Us Press Release
Coronavirus crisis: SME export sentiment at historic low
Zurich, June 25, 2020. The coronavirus crisis has led to a sharp decline in the export sentiment of internationally active Swiss small and medium-sized enterprises (SMEs). According to the latest survey conducted by Switzerland Global Enterprise (S-GE), 65% of all SMEs will record a decline in exports at the end of the first half of 2020. The pandemic has had negative consequences for 81% of the companies surveyed, primarily due to a significant reduction in demand and falling sales figures. Only 39% of SMEs expect to see a rise in exports in the second half of the year. There has also been a huge fall in the Credit Suisse Export Barometer.
As a result of the global coronavirus crisis, SME export sentiment has fallen to its lowest level since the survey was first conducted by Switzerland Global Enterprise (S-GE) back in 2010. According to the latest survey, which was carried out between the start of May and the start of June 2020, two-thirds of SMEs are set to record a decline in exports at the end of the first half of 2020. The pandemic has had negative consequences for 81% of the companies surveyed, primarily due to a significant reduction in demand and falling sales figures, as well as the lack of certainty about the future – making it difficult for businesses to plan. Looking ahead to the second half of 2020, 39% of SMEs anticipate that exports will grow, while 23% expect stagnation and 38% are preparing for a further decline in exports.
The impacts of the coronavirus crisis are also clearly demonstrated by the Credit Suisse Export Barometer, which reflects foreign demand for Swiss products. The figure recorded in April (-2.59) was only ever lower during the financial crisis of 2008. Although the Export Barometer recovered to -1.54 in May 2020, this is still well below the growth threshold.
Tiziana Hunziker, an economist at Credit Suisse, commented: “Protective measures imposed by the state and production shutdowns have disrupted international supply chains, leading to delays in corporate investment. We believe that the majority of exporters recorded their lowest export volumes in April. Although exports from the mechanical, electrical and metal (MEM) industry experienced a rebound in Asia as early as April, losses of income and rising unemployment can be expected to persist for some time. Sectors that are particularly sensitive to consumer confidence – such as the watchmaking industry – will therefore probably have to wait longer for a rebound.”
Alberto Silini, Head of Consulting at Switzerland Global Enterprise (S-GE), added: “The coronavirus crisis has acted like a brake on global trade. Internationally-oriented Swiss SMEs have been heavily impacted by this sharp fall in demand, as is clearly reflected by the historically low level of export sentiment. However, the survey also shows that many companies have experienced a stabilization in the meantime and are now looking to the future with more optimism. Following a phase dominated by crisis management efforts, it is now important for Swiss SMEs to swiftly adapt their value creation chains to the new environment and to return to their target markets with a better strategy than their international competitors. The diversification of export markets and procurement sources, as well as the use of instruments to hedge against currency and export risks, have a key role to play in this context.”
Further information on the SME export outlook for the second half of 2020 can be found in the brochure.
The SME export outlook for the first half of 2021 will be published on January 21, 2021.
Credit Suisse Export Barometer methodology
The Credit Suisse Export Barometer is based on the dependence of Swiss exports on foreign export markets. In constructing the export barometer, we have drawn together 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 growth threshold. The long-term average growth of Swiss exports of approximately 5% is 1. More detailed information is provided in ‘Credit Suisse (2009), External Trade Switzerland – Facts and Trends, Swiss Issues: Industries’, which is available at: www.credit-suisse.com/research.
Switzerland Global Enterprise SME Export Sentiment Indicator methodology
The SME export sentiment indicator is based on a semiannual survey of a fixed panel of around 200 Swiss SMEs. Participants represent the pharmaceuticals/chemicals industry, machinery, consumer goods, the metals industry, paper, electrical engineering, the precision instruments industry, services, ICT and food. SMEs indicate whether they expect growth, stagnation or a decline in exports in the current semester compared with the previous one. To emphasize the forecast nature of the SME export sentiment indicator, expected export activity in the following semester is weighted at 60% with exports in the current semester being weighted at 40%. The SME export sentiment 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 behind a change in their export volume, export markets, etc. This information gives an accurate picture of the export activities of Swiss SMEs.