Corporate Press Release

Press Release

SME Export Indicator for Q2 2011: Export Sentiment Still Bright, SMEs Defy Strong Franc

Demand for Swiss export goods is looking extremely positive for the next few months. As a result, Swiss SMEs are heading into the second quarter of 2011 in an optimistic mood. Those are the findings of the SME export outlook indicator produced by Credit Suisse and Osec. The strength of the Swiss franc remains a key imponderable, however.

The Credit Suisse export barometer, which records foreign demand for Swiss products, finished the quarter at a very high level of 1.4 – a figure last reached in the year 2000. Given the forecasting lead time of one to two quarters, this suggests that the prospects for Switzerland's exporters are excellent: Strong demand from abroad should ensure a high level of export activity in the next few months.

Dynamic demand from abroad is evidently having a positive impact on Swiss SMEs. This is shown by Osec's SME export outlook indicator, which is based on a panel survey of over 200 Swiss SMEs. At 69.7 points, the indicator now nearly matches its level in the previous quarter (70.6). This figure is calculated from the export sentiment of SMEs for the second quarter of 2011, as well as exports in the preceding quarter. On this scale from 0 to 100, values of over 50 indicate export growth. Consequently, export-oriented Swiss SMEs are doing very well despite the strength of the Swiss franc.

Growth in Almost All Sectors
According to Osec's SME export outlook indicator, the positive export sentiment for the second quarter of 2011 is prevailing in all sectors. The mechanical engineering industry can expect a veritable boom. Companies in electrical engineering and services and – to a slightly lesser extent – those in the paper, metals and precision instruments sectors can also look forward to substantial growth rates. Only the consumer goods industry needs to brace itself for a downturn in exports in 2011, which would be attributable to the strength of the Swiss franc. The companies that are predicting growth in exports over the coming months ascribe this mainly to their own efforts, notably increased marketing efforts (cited by 47%), and product innovation (also 47%).

The Credit Suisse export barometer also shows a noticeable surge in foreign demand for all key Swiss export industries. Demand in the metals sector in particular is looking strong, followed by the pharmaceutical and electrical engineering industries. Export growth in mechanical engineering and chemicals is expected to be only average or showing moderate change.

China's Importance Increasing
According to the Credit Suisse export barometer, export growth has a broad geographic base: In virtually all countries, indicators are currently at record highs. According to Osec's SME export outlook indicator, however, the destination of Swiss exports is expected to see some shifts over the coming six months (second and third quarters of 2011). Despite the weakness of the euro, more Swiss SMEs will export to Europe. Moreover, China is becoming an increasingly important destination for exports, overtaking the US as the most popular non-European market.

Strong Swiss Franc Having an Impact
Over half of the Swiss SMEs surveyed by Osec (55% to be precise) are anticipating a fall-off in exports owing to the strong Swiss franc. The precision instruments (82%), metal (76%) and paper products (69%) industries are particularly affected by this exchange-rate development. The services (40%), electrical engineering (43%) and consumer goods (46%) sectors are relatively resistant.

75% of the SMEs surveyed stated that the strong franc was adversely affecting their profit margins. The paper (93%) and chemicals/pharmaceuticals industries (90%) in particular are anticipating pressure on margins, as are the mechanical engineering (79%) and the metals industries (78%), to a somewhat lesser extent. The 25% of SMEs that were not concerned about any negative impact on profit margins stated the following reasons: successfully implemented price rises; currency hedging; and reductions in production costs.

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 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

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. 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.