Exports: Pandemic hits Swiss export companies hard

Coronavirus crisis hits Swiss exports. Slump in demand impacts SMEs.

The coronavirus crisis is hitting Swiss SMEs in the export sector hard. As Swiss export sentiment falls to a record low, demand also experiences a marked decline. In which sectors can Swiss export companies breathe a sigh of relief and where is patience still required until we see a recovery?

Swiss export sentiment is subdued

Despite the instruments introduced by the federal government to support the economy, the coronavirus crisis has not left Swiss exports unscathed. In the latest survey by Switzerland Global Enterprise (S-GE), more than 80 percent of the companies surveyed said that the crisis had negatively affected their business. Export sentiment determined based on the survey of around 200 companies is lower than ever before at 41 points. By way of comparison, the scale – which reflects the export expectations of SMEs and their actual exports – was still at around 65 points in December 2019.

While export expectations for 2020 were still optimistically high at that time, almost two-thirds of the SMEs surveyed now report that they are ending H1 2020 with a decline in export activity. Only a minority of 19 percent actually recorded an increase in exports over the past month. The Swiss export industry was particularly affected by the slump in demand, the losses in sales and turnover, and the lack of certainty regarding the duration of the pandemic and the state-imposed protection measures.

Expectations regarding export trends are conservative 

Opinion is also divided with regard to H2: Some 38 percent of the SMEs surveyed expect their export business to continue declining, while 39 percent expect to see an increase and 23 percent expect their export activities to stagnate.

Swiss export sentiment falls sharply in 2020

Sentiment among Swiss SMEs in the export sector reaches rock bottom

Weighted value from H1 2020 and H2 2020; growth threshold = 50

Source: Survey of a panel of around 300 Swiss SMEs by Switzerland Global Enterprise

Demand for Swiss products in the export market is muted

The impact of the coronavirus crisis on Swiss exports as well as the drop in demand are also evident in the Credit Suisse export barometer, which maps foreign demand for Swiss products. Compared to the previous half-year, the barometer has recorded a marked decline since the beginning of Q2 2020, reaching a multi-year low of –2.59 points in April. Although still well below the growth threshold, this figure fought back up to –1.54 points in May.

The reason for the low figures is likely to be the slump in industrial production as well as an investment backlog among companies. Pandemic protection measures meant that companies had to halt their production processes, disrupting international goods chains. According to Credit Suisse forecasts, however, the majority of Swiss export companies are likely to have reached their low point in April.

Exports: Credit Suisse export barometer falls below growth threshold

Credit Suisse export barometer shows significant impact on exports

In standard deviations, growth threshold = 0

Source: Bloomberg, Datastream, PMIPremium, Credit Suisse/IDC

The recovery in Swiss exports will require patience

Nevertheless, uncertainty and caution, especially when it comes to companies' investment decisions, could continue to stifle growth potential. Sentiment among private consumers is also expected to remain subdued, meaning that export companies that are heavily dependent on consumer sentiment will have to wait a little longer for that much-needed recovery.

Nevertheless, uncertainty and caution, especially when it comes to companies' investment decisions, could continue to stifle growth potential. Sentiment among private consumers is also expected to remain subdued, meaning that export companies that are heavily dependent on consumer sentiment will have to wait a little longer for that much-needed recovery.