Corporate Press Release

Press Release

SME Export Indicator for Q1 2013: Mild Optimism at Start of Year

Export sentiment among Swiss SMEs is unchanged on a quarter-on-quarter basis, at slightly above the growth threshold. Growth is being driven firstly by the big economies of the US, China, and the UK, and secondly by a number of emerging-market countries. At individual sector level, export expectations for first-quarter 2013 show considerable divergence. The exchange-rate problem is continuing to ease. These are the findings of the SME export indicator produced by Osec and Credit Suisse.

The Credit Suisse export barometer, which records foreign demand for Swiss products, stands at a level of 0.25 in the first quarter of 2013; this compares with 0.14 in the closing quarter of 2012, and is therefore slightly above the growth threshold of 0.

The Osec SME export prospects indicator stands at 56.3 points for the first quarter of 2013, exactly on a par with its level in the preceding quarter. This figure is calculated from the export sentiment of SMEs for the first quarter of 2013, as well as effective exports in the final quarter of 2012. The SME export prospects indicator continues to point to a slight rise in exports, given that the growth threshold lies at 50 points on a scale from 0 to 100. A total of 32% of SMEs expect exports to grow over the coming quarter, 49% anticipate stagnation in the volume of their exports, while 19% fear declining exports.

Growth Fillip from US, UK, China, and Emerging-Market Countries
According to the Credit Suisse export barometer, export prospects in the major economies of the US, China, and UK continue to improve compared with the preceding quarter. In particular, momentum in relation to China is likely to reach an 18-month peak next quarter. Emerging-market countries can also be expected to give a boost to the Swiss export sector. Mexico, India, Brazil, Turkey, and Indonesia are likely to maintain the solid upward trend of previous months. Russia, South Korea, and Taiwan, whose economies are currently more or less in stagnation, can be expected to deliver only a minimal impetus to growth. Prospects for exports to the crisis-hit euro zone as well as Japan also remain bleak.

The SMEs polled by Osec also continue to regard the US as growth driver: 43% expect to export goods or services to the US in the coming six months, compared with only 38% in the preceding quarter (multiple answers possible). 46% of SMEs are likely to export to the North America region as a whole (44% in previous month).

Notwithstanding both the strength of the Swiss franc and the euro crisis, Europe nevertheless remains by far the most important destination region for Swiss exports. 91% of the Swiss SMEs surveyed by Osec intend to export to Europe in the first half of 2013, exactly the same figure as in the preceding quarter. The most important European export market is still Germany, to which 78% of the SMEs surveyed export (80%). This is followed by France, which is mentioned by 51% (51%), Austria, with 49% (47%), and Italy, with 46% (40%). It is interesting to note that Italy has made up some of the preceding quarter's fall from 49% to 40%.

At 54% of mentions, the Asia-Pacific region remains the second most important market for Swiss exports (54%). China is the most important destination for exports in Asia with 32% (34%). This is followed by India with 28% (27%), and Japan with 23% (22%). 29% (34%) of SMEs are likely to export to the Middle East/Africa region, and 24% (20%) to South America.

A Mixed Picture by Sector
The picture is exceptionally mixed if we look at the individual sectors. Four of the eight sectors questioned by Osec – led by chemicals/pharmaceuticals, but also including the metal industry, service sector, and paper industry – saw themselves as being on a growth trajectory in the first quarter of 2013. The other four sectors anticipate a decline, which is likely to be particularly pronounced in the case of machinery.

SMEs are much more optimistic as regards economic prospects compared with the preceding quarter. One-quarter of the businesses expecting higher exports in the coming months attribute this to a recovery in the economic environment; this compares with just 13% in the preceding quarter (multiple answers possible). In parallel with the improved economic outlook, the need for marketing appears to be receding. Only 44% of companies currently cite greater marketing as a driver of export growth; this compares with 51% in the preceding quarter. The most important competitive factor for Swiss SMEs is product innovation, cited by 52% versus 46% in the preceding quarter.

Worries about Strong Swiss Franc at Low Point
The exchange-rate problem is gradually becoming less acute for Swiss SMEs: At the start of the first quarter of 2013, 60% of the companies in the Osec SME export prospects survey expected the growth in their exports to slow as a result of the strong Swiss franc. This is the lowest figure for 18 months. The service sector, in which only 34% of firms surveyed expect a negative influence, is looking very resilient. The metal, precision instruments, and machin-ery sectors are especially sensitive about exchange-rate developments, with 87%, 80%, and 73% of SMEs respectively expecting a negative influence. 74% of the SMEs surveyed stated that the strong franc was adversely affecting their profit margins. This figure too is the lowest for 18 months.

Methodology of the Credit Suisse Export Barometer
The Credit Suisse export barometer takes as its basis the dependence of Swiss exports on foreign export mar-kets. 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. 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 at 1.
For more detailed information: Credit Suisse (2009), External Trade Switzerland – Facts and Trends, Swiss Issues: Industries, available at www.credit-suisse.com/research.

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. To emphasize the forecast nature of the SME export indicator, expected export activity in the following quarter is weighted at 60%, with exports in the current quarter being weighted at 40%. 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.