Corporate Press Release

Press Release

SME Export Indicator for Q4 2011: Export Sentiment Hit by Economic Uncertainty and Strong Swiss Franc

The slowdown in global economic activity and strength of the Swiss franc are resulting in a cooling of the export climate for Swiss SMEs. Having grown consistently over the course of the year so far, exports are expected to slow significantly or even stagnate in the fourth quarter of 2011. The vast majority of SMEs also face pressure on margins. Those are the most important findings of the SME export outlook indicator produced by Credit Suisse and Osec.

The strong Swiss franc continues to unsettle Swiss SMEs: Nearly three-quarters (73%) of companies in the Osec SME export prospects survey expect the growth in their exports to slow as a result of the strong Swiss franc. This compares with a significantly lower figure in previous quarters (Q3/2011: 67%; Q2/2011: 55%). The metal (86% expect a negative impact), precision instruments (81%), and machinery (82%) industries are particularly affected by this exchange-rate development. The service sector is relatively immune (56%).

A high 83% of the SMEs surveyed stated that the strong Swiss franc was adversely affecting their profit margins. This figure too has deteriorated once again in relation to the preceding quarter (78%). Pressure on margins was especially pronounced in the chemicals/pharmaceuticals (92%), electrical engineering (89%), and precision instruments (88%) sectors. The survey for the fourth quarter of 2011 was conducted shortly after the Swiss National Bank's announcement that it was setting a euro exchange rate target of 1.20 Swiss francs. It remains to be seen how this measure will impact on sentiment among SMEs in the coming quarters.

Slowdown in Global Economic Activity Is Hitting Export Sentiment
The Credit Suisse export barometer, which records foreign demand for Swiss products, currently stands at a level of -0.45. Export prospects have deteriorated once again due to the global economic slowdown. However, they remain well above the growth threshold of -1. The Osec SME export outlook indicator also shows a slight cooling of export sentiment: It currently stands at 49.7 points, compared with 65.6 points in the preceding quarter. On this scale from 0 to 100, values of over 50 indicate export growth. Only 32% of the Swiss SMEs responding to Osec's SME export outlook survey expect growth in exports during the coming quarter; this compares with 45% at the mid-year stage.

Export Prospects Declining across a Broad Front
The Credit Suisse export barometer points to another slowdown in the development of exports in the fourth quarter of 2011 – though overall the positive growth is expected to continue. The watch industry is likely to get off relatively lightly as it continues to benefit from strong demand worldwide. Machinery is the industry with the most uncertain prospects, as it is crucially dependent on the economic situation in Germany and China.

The Osec SME export outlook indicator highlights significant differences between the individual sectors: Whereas precision instruments, services and the paper products industry still anticipate growth in exports, the other sectors expect them to decline. The electrical engineering sector is especially pessimistic. The companies that are predicting growth in exports over the coming months ascribe this mainly to product innovation (cited by 47%; multiple answers possible) and increased marketing efforts (45%). At 28%, the change in pricing policy was cited significantly more frequently than in previous quarters. This increase is likely to be attributable not least to the fact that the Swiss National Bank's target for the euro exchange rate provides a more predictable basis for determining prices. The SMEs that anticipate a decline in exports now indicate the economic downturn as the primary cause. 53% named this as a factor, compared with 24% in the preceding quarter.

Little Change in Export Destinations
Uncertainty about the future direction of the economy dominates the picture for Switzerland's most important export markets, according to the Credit Suisse export barometer. Economic growth has come to a standstill in many places, including the eurozone. The US, UK and some emerging-market countries are still showing slight signs of growth. In overall terms, however, exporters are unlikely to enjoy much of a tailwind from the economic front for the time being.

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. The figure for the past six months was 88% (multiple answers possible). 49% of Swiss SMEs will export to the Asia/Pacific region in the coming six months, 38% to North America, 27% to the Middle East/Africa region, and 25% to South America.

Methodology Credit Suisse Exportbarometer
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 roughly 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

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.