Swiss exports to Russia plummeted 36% last month compared to the same period last year according to the latest official statistics. But companies are refusing to panic, instead taking a long-term view of the currently volatile market.
Falling oil prices, coupled with Western sanctions that are beginning to bite in Russia, have sent the rouble into freefall this week. Russia’s central bank hiked up interest rates an astonishing 6.5% to 17% on Tuesday, but it still fears the economy could shrink by up to 5% next year if oil prices stay so depressed.
President Vladimir Putin held a three-hour press conference on Thursday, blaming Western interference for his country’s woes, specifically economic sanctions by the United States and the European Union over Russia’s involvement in Ukraine and annexation of Crimea earlier this year.
Switzerland has imposed much milder sanctions and frozen free trade agreement talks with Russia and surrounding countries.
With the rouble losing close to half of its value since the start of the year, the cost of buying goods and equipment from abroad has soared for Russians. The Swiss Customs Office published figures on Friday that showed year-on-year exports declining by more than a third in November alone (to CHF255 million or $260 million), and by 5.3% for the first 11 months of this year (CHF2.64 billion).
Swiss exports to Russia totalled CHF3.1 billion last year, with pharmaceuticals, machinery and watches leading the way.
Officials said that November’s figure should be read with caution as exports reached an unusually high peak in the same month last year. But the trend has still been one of decline all year.
Swiss business groups are putting a brave face on the mounting problems of doing business in Russia, insisting that the market will remain a fertile one in the coming years and decades.
“Things are certainly bumpy right now, but while there may be some jolts along the way, companies are in the market for the long-haul,” Dorit Sallis, managing director of the Joint Chambers of Commerce (covering Swiss trade with Russia, Ukraine, Belarus and other former Soviet states), told swissinfo.ch.
“I have not been informed of any companies considering an exit from Russia. There have actually been a few firms setting up subsidiaries in recent months, so it is not all bleak news. Russia remains a very promising market that has a lot of unmet needs.”
Those needs include industrial, technological and construction know-how as the vast country seeks to modernise its infrastructure. In addition, Russia is attempting to develop a range of industries to reduce its economic dependency on oil and gas.
Around 200 Swiss companies run operations based in Russia, investing an accumulated CHF15 billion in foreign direct investments (money spent on buildings and equipment) over the years and employing around 73,000 people in the country.
Winterthur-based Burkhardt Compression manufactures heavy equipment for the oil and gas industry.
“We invest in projects that take two to three years to plan and the same to construct,” chief executive Marcel Pawlicek told Swiss public television SRF. “We have a long-term horizon, so it is difficult to talk about the possible consequences of short-term events.”
“For the time being, the effects of the depreciating rouble are not being felt in the machinery industry,” Philippe Cordonier, spokesman for the engineering and machine building lobby group Swissmem, told the Swiss News Agency.
Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry, told the agency that the declining purchasing power of Russians was “worrying”.
The State Secretariat for Economic Affairs (Seco) said it was too early to assess the full impact of the rouble crisis on the Swiss economy.