Swiss export forecast at a high level

At the beginning of 2021, the Euler Hermes Export Forecast stands at 0.78 points - the same value at which the revised indicator was already three months ago. The export forecast is above the zero-point threshold indicating the long-term average growth path of the Swiss export industry, and thus predicts a significant recovery in Swiss exports over the course of the year. This development is supported by the statistical base effect: Given the deep dip in the forecast in spring 2020, high annual rates of change hardly come as a surprise.

According to Export Forecast: Economic recovery in the second quarter of 2021

Euler Hermes expects global trade volumes to grow again by 5.8% in 2021 after a decline of 10% in the previous year. For Switzerland, 2021 should also be a year of economic recovery. In the short term, however, Euler Hermes expects the situation to deteriorate for the time being due to the second wave of the pandemic and its containment measures. "An economic resurrection is not expected until Easter at the earliest," said Katharina Utermöhl, European economist at Euler Hermes. "Then progress on the vaccination front and warmer temperatures should allow a gradual easing. The mid-year vaccination of at-risk groups sets the stage for a strong consumption boom in the second half of the year. The increasingly synchronized revival of the global economy should also provide a tailwind for Swiss exports." Utermöhl believes that a return to some degree of economic normality is not possible until 2022. However, the economic cleanup will still be far from complete by then - the unemployment rate is likely to remain at an elevated level and the wave of insolvencies will continue to roll on in 2022. Overall, Euler Hermes expects the Swiss economy to grow by 2.6% in 2021 (2022: +3.2%).

Consumer confidence remains low despite positive industry development

Asia and the emerging markets are currently seen as the biggest beacons of hope for Swiss industry. This positive outlook is an important factor for rising commodity prices, especially industrial metals. Furthermore, freight rates for the transport of shipping containers have exploded since December 2020, for which a backlog at Asian ports due to the unexpectedly fast recovery of the global economy is responsible. In addition, due to low passenger numbers, more all-cargo aircraft are operating, making air cargo more attractive to exporters and importers. As a result, the volume of global air freight traffic in December 2020 was back at the level of the previous year. In contrast to the positive development of these indicators, consumer confidence continues to be heavily weighed down by the COVID-19 pandemic, which negatively impacts the Export Forecast. If an improvement takes longer, this is likely to have consequences for the industrial sector, which is why the pandemic remains a weighty factor.

Foreign trade with China at a new high

After rising by 9.2% in real and seasonally adjusted terms in the third quarter of 2020 compared with the previous quarter, Swiss exports stagnated in the fourth quarter. Imports fell by 1.9%. Nevertheless, the second half of the year was considerably more encouraging overall than the first. Overall, exports fell by 7.1% to 225.1 billion Swiss francs in 2020, while imports declined by 11.2% to 182.1 billion Swiss francs. Stefan Ruf, CEO Euler Hermes Switzerland, commented, "It is noteworthy that foreign trade with China is at a new record high in both traffic directions. The Swiss export industry has managed to expand trade with China by a whopping 10% to 14.7 billion Swiss francs in 2020, despite COVID-19." Despite this exception, the Swiss export industry sold fewer goods overall in 2020 in the three major economic areas of Europe, North America and Asia.

Source: Euler Hermes