SME Export Indicator Q3 2015: Strong franc drives export sentiment to record low Donnerstag, 09. Juli 2015 - 10:00

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% 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% to 74%. “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% of Swiss SMEs want to address new markets, up from 20% 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.”


The SME Export Indicator for the fourth quarter of 2015 will be published on October 8, 2015.



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. 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 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 the SME Export Outlook Indicator of Switzerland Global Enterprise
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 signal 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.