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Exports rise but face slackening demand

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Swiss exports grew by more than ten per cent in 2007 for the second year in a row, although the final quarter saw demand fall off.

This content was published on January 29, 2008 - 12:25

The strength of the watchmaking industry contributed towards the good performance, figures from the Federal Customs Office show.

The global economic outlook could mean that figures are not as good this year, even if the Swiss economy is unlikely to suffer.

According to the statistics, the food, beverage and tobacco industry did best last year, increasing its exports by nearly 24 per cent. Coffee sales abroad trebled to SFr570 million, while beverage exports increased by a third.

The watchmaking industry (+16.1 per cent) came in second in the export rankings. It was a record year for watchmakers, who shipped nearly SFr16 billion worth of goods abroad last year.

"Our success is mainly due to the good health of the global economy and demand from emerging markets," said Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry.

Pasche told swissinfo that watchmakers were in a position to respond to customer demand for innovative products.

Luxury watches

The luxury watch segment represented two-thirds of sales abroad, with clients especially interested in mechanical timepieces. But there was increased demand for all kinds of watches.

The metal industry, third in the export rankings, saw prices for iron and steel take off, increasing by nearly a quarter in 2007, but overall growth was only slightly above last year's result at 15.3 per cent.

The plastics sector's exports stood at 12.5 per cent, while the machine and electronics industry's growth was 1.5 points better than in 2006 at 11.3 per cent. Equipment for the graphics sector (-6 per cent) and telecommunications items (-19.8 per cent) failed to attract foreign buyers.

The chemical industry, which includes the all-important pharmaceutical sector, saw sales abroad increase by 9.3 per cent in 2007. However, this was more than a third less than the previous year.

Exports to industrialised nations, especially to those in the European Union, Switzerland's biggest trading partner, grew by a tenth, while those to emerging markets increased by a quarter. There was almost no growth in United States exports.

Slowing demand

While the year was generally good for Swiss products abroad, the final quarter of 2007 saw a decline in growth, especially in December.

"The decline in export growth reflects slowing demand from the global economy," said Felix Brill, an economist at Swiss bank UBS. "However export and import data is quite volatile in Switzerland, since a single event, such as an aircraft purchase by a local airline can easily distort the figures."

Brill told swissinfo that this trend is likely to continue in 2008. "The strength of the Swiss franc versus the euro and the dollar will also dampen export growth," he added.

The Swiss economy should not suffer from a turndown either according to Brill, who says that imports will remain strong.

"This should continue as a result of stronger consumption, especially for label brands, due to employment growth and real wage increases," he pointed out.

No recession fears

Watchmakers for example are not particularly concerned by fears of a recession or of a knock-on effect for the turbulent financial markets.

"Our progression will continue," said Pasche. "We don't think our sales will be affected by the current state of the stock market."

Brill tends to agree.

"If anything, firms have found it easier to access cheaper loans over the past few months," he said. "They also still have full order books and don't seem about to give up on plans to invest."

But he warns that "if the US does go into recession, and consumer and business sentiment deteriorate, companies could delay investments".

swissinfo, Scott Capper

Military exports

Switzerland exported 14% more military equipment in 2007, selling SFr464.5 million last year against SFr397.6 million in 2006.

Most of this equipment was sold to European nations, although the figures released by the Federal Customs Office do not reveal whether these were the final destinations for the items that were exported.

Ireland purchased the most – SFr50.7 million – ahead of countries such Denmark, the Netherlands, France and Italy. Exports to Britain, for which no authorisation is required, were worth SFr39.5 million, while those to the US reached SFr41.9 million.

Pakistan imported SFr37.5 million worth of Swiss military equipment, India SFr2.1 million.

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Trade surplus

Switzerland's trade surplus reached a record high in 2007, with exports outstripping imports to the tune of SFr13.89 billion.

This result is 15.2% better than in 2006. Exports were worth SFr197.29 billion, increasing 11.2%. Growth was not as high as in 2006 (13.2%).

In real terms, exports increased by 6.5%.

Prices also went up. For exports, the increase was 4.4%, due mainly to higher costs for metals, watches and paper. Import prices increased by 3.9%, down from 5.2% in 2006.

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