Pandemic leads to historic drop in Swiss foreign trade

The watch industry was particularly affected by the closure of stories and travel restrictions associated with the pandemic. © Keystone / Gaetan Bally

Exports and imports declined by CHF40 billion ($45 billion) in 2020 due to the Covid-19 pandemic, setting foreign trade levels back by three years.

According to the annual foreign trade statistics released on Thursday, Switzerland experienced a historic decline in both exports (-7.1% to CHF225.1 billion) and imports (-11.2% to CHF182.1 billion) in 2020. The second quarter saw trading activity plummet at an unprecedented pace.

This was the biggest annual drop in trade since 2009, sending Switzerland back to 2017 levels.

All export sectors were affected except for chemical and pharmaceutical products which saw a 1.6% increase in exports (CHF1.8 billion). Jewellery and watches accounted for 50% of the decline. Sales fell by a third (-4 billion) and a fifth (-4.7 billion) for the two sectors, respectively.

In relative terms, shipments to Asia fell most (8.8%) but this varied across the region. While exports to Hong Kong and Japan decreased by a total of CHF3 billion, those to China grew by CHF1.3 billion to reach a new high of CHF 14.7 billion. This was largely thanks to chemical and pharmaceutical products, and to some extent the watch industry.

Exports to Europe decreased by 6.2%, or CHF 8.1 billion. The drop in exports to France was exceptionally sharp, pushing levels back to their lowest since 2000. Exports to North America shrank by 6.1%.

The decline in imports was mostly attributed to a plunge in imports of jewellery, particularly gold for smelting from the United Arab Emirates. Imports of textiles increased, especially protective clothing and masks. Regionally, imports from the US fell by 16%, from Europe by 11.2%, and Asia 9.9%.

Worries for watch industry

The entire Swiss watch industry experienced a severe slump because of the pandemic, the industry association FH reported Thursday. The value of Swiss watch exports dropped to CHF17 billion in 2020 – a decline of almost 22% compared to 2019.

This is comparable to the fall recorded in 2009 (-22.3%) after the financial crisis. The second quarter of 2020 notably saw exports drop by 61.6%. Things started to improve in the second part of the year thanks largely to demand in China.

Swiss watchmaker Swatch was hit particularly hard by the pandemic. On Thursday, it announced its first negative annual figures since its founding in 1980. It recorded a net loss of CHF53 million as sales dropped by one third to CHF5.6 billion. Last year it posted a profit of CHF748 million. The company was particularly affected by the closure of retail stores and travel restrictions.