Articles & stories

SME Export Indicator: Strong Franc Drives Export Sentiment to Record Low

By accessing the videos and/or podcasts in this page, you hereby consent to Credit Suisse disclosing your full IP address to YouTube and/or SoundCloud for the purpose of enabling you to view or listen to the content hosted in those platforms. These third party platforms are not operated or monitored by Credit Suisse, and your IP address and any other personal data collected, processed or stored by these third party platforms will be subject to their own privacy policies, and Credit Suisse will not be responsible for their treatment of personal data.

Swiss SMEs' export sentiment for the quarter ahead has fallen to a record low, according to the quarterly survey of more than 200 Swiss small and midsize exporters conducted by Switzerland Global Enterprise (S-GE). Almost three-quarters of the SMEs surveyed said that they were losing export volume as a result of the strong Swiss franc.

The Credit Suisse Export Barometer indicates that foreign demand continues to pick up, but its transmission to Swiss SMEs is being impeded by the exchange-rate situation. Based on foreign demand factors alone, export growth should currently be around 5 percentage points higher than the actual figure is at present.

The Credit Suisse Export Barometer, which tracks foreign demand for Swiss products, currently stands at a level of 1.04 and – like in the prior two quarters – is thus close to the historical mean of 1.00, which would imply an average export growth rate going forward.

Credit Suisse senior economist Bettina Rutschi says: "The economic recovery in the USA will again continue to boost demand for Swiss small and midsize exporters in the third quarter. The accelerating economic pickup in Europe is likewise sending positive signals. Since only a scant 0.4 percent of total Swiss exports go to Greece, the crisis there is unlikely to have any direct impacts on Switzerland's export sector. However, the Credit Suisse Export Barometer merely factors in foreign demand without taking exchange-rate developments into account. According to our calculations, export growth based on foreign demand alone should currently be around 5 percentage points higher than the actual figure is at present. This means that the strength of the Swiss franc is substantially hurting Swiss exports."

"The situation facing Swiss small and midsize exporters almost a half-year after the Swiss National Bank's decision to scrap the EUR/CHF exchange-rate floor regrettably has not improved," says Alberto Silini, the Head of Consulting at S-GE. "On the contrary, the current S-GE Export Outlook Index reading of 43.3 points has never been lower or farther below the expansion threshold of 50 since the inception of the survey in 2010." The index reading was calculated by taking Swiss SME export sentiment for the third quarter of 2015 and combining that with actual exports in the prior quarter. In addition, the percentage of SMEs that have reported that the strong Swiss franc is exerting an adverse impact on their export volume has increased even further from 67 percent to 74 percent. "To counter the effects of the strong Swiss franc, in the current climate companies are still placing top priority on optimizing their procurement operations, followed by cutting production costs and raising prices. On the other hand, fewer SMEs than in the prior quarter intend to lower their wage costs. Our survey additionally shows that 24 percent of Swiss SMEs want to address new markets, up from 20 percent in the prior quarter. Our emphatic advice here is that however necessary it may be to cut costs, it's tapping new export markets that creates long-term growth."

Further information on the SME Export Indicator is available on the website of Switzerland Global Enterprise. The SME Export Indicator for the fourth quarter of 2015 will be published on October 8, 2015.