Export prospects approaching long-term trend

The Allianz Trade Export Forecast stands at 0.33 points in May 2022. In February, it was still at 0.69 points. The indicator is thus slowly approaching the long-term trend growth. The signals still point to above-average export growth, as the analysis shows. However, if it takes longer for the trouble spots to ease, there is a risk of a sharper countermovement in the export outlook in the course of the year. The growth forecasts for world trade have already been adjusted downward.

Export prospects: Optimism gives way to realism

After the "reopening" of the global economy last year caused much optimism among exporters, the development of global trade in 2022 is now likely to be much more subdued than expected. The Russian invasion of Ukraine has shaken business and consumer confidence, driven up commodity prices and further exacerbated corona-induced supply chain stress - most recently fueled primarily by China's zero-covid strategy. "We have accordingly revised our forecast for global trade in 2022 downward from 6 % to 4 %," explains Allianz Trade European economist Katharina Utermöhl. For Switzerland, Allianz Trade expects GDP growth of 2.2 % in 2022 (2023: +1.3 %) and export growth of 4 % (2023: +3 %).

Swiss foreign trade: growth in the first quarter

Swiss foreign trade continued to grow in the first quarter of 2022, reaching a new high. While imports continued to gain momentum, exports lost momentum slightly. The trade surplus decreased significantly, by CHF 2.8 billion. Compared with Q4 2021, exports increased by 1.2 % in nominal terms. In real terms - i.e. adjusted for inflation - there was an increase of 2.4 %. The largest contribution to the quarterly increase came from watch exports, which rose by 5.3 %. This was followed by metals with 6.3 % and machinery and electronics with 2.4 %. Exports of precision instruments rose by 4.2 %. Meanwhile, exports of chemical-pharmaceutical products decreased slightly (-0.7 %). Despite the increase in immunological products (+7.1 %), the decline in exports of active pharmaceutical ingredients (-10 %) pushed the group result into negative territory. The high starting levels or base effects must be taken into account here.

Sharp rise in costs for energy sources

In the first quarter, 6.7 % more goods were imported compared with the previous quarter (in real terms, the increase was 2.7 %). Apart from jewelry (-15.1 %), textiles, clothing and footwear (-3.7 %) and precision instruments (-0.5 %), the other product groups recorded an increase in imports. The largest contribution came from energy sources (+1.8 billion Swiss francs, +46 %). However, this increase was not due to higher volumes but exclusively to rising prices (+0.8 % in real terms). Imports of chemical and pharmaceutical products also increased sharply by 11.8 %. Imports of metals were also higher (+4.2 %), continuing their growth trend of seven quarters.

Swiss exporters hold their own better than their EU counterparts

Swiss exporters will also feel the impact of subdued global demand. In particular, the significant economic slowdown in key trading partner countries such as Germany, the UK and France, which together absorb 30 % of Swiss exports. However, Swiss exporters are likely to fare better than their EU counterparts. For one thing, the Swiss economy is less dependent on inputs from overseas, so the industry should not be as badly affected by supply bottlenecks. For another, the less cyclically sensitive exports of the chemicals and pharmaceuticals sectors - which together account for around 40 % of total Swiss exports - should again provide reliable support. However, analysts are eagerly watching the impact of the coincidence of rising prices and falling economic activity. This constellation harbors the risk of a "perfect storm", which would disrupt a normalization in the long term.

Source: Alliance Trade