Export outlook clouds over

The Allianz Trade Export Forecast stands at -1.13 points in the third quarter (May: +0.33 points). This means that the indicator is significantly below the long-term trend growth. Negative annual growth rates are expected for exports in the next six to twelve months. Growth forecasts for the global economy have again been revised downward. Accordingly, the export outlook is no longer developing so positively.

Uncertainties cloud export prospects

"Despite temporary brightenings in the financial markets, most leading and sentiment indicators continue to point clearly downward," Allianz Trade Europe economist Katharina Utermöhl explains the situation. "The Ukraine war, inflation concerns and key interest rate hikes are weighing on the markets." Currently, a flight to safe currencies such as the Swiss franc is taking place in the foreign exchange market. The euro has been below the one-franc mark since the beginning of July. Due to the uncertainties in many places, the mood of Swiss consumers and investors has suffered massively. At -42 points, SECO consumer sentiment is at its lowest level since the survey began in 1972. On a positive note, however, the risk of recession for the Swiss economy in the short term is significantly lower than for neighboring European countries, as the surge in inflation and dependence on Russian gas are less pronounced. However, the Swiss economy is not immune to the global economic slowdown.

GDP downward revisions

For Switzerland, Allianz Trade expects GDP growth of 2.4 % in 2022 (2023: +0.7 %), inflation of 2.8 % (2023: +1.6 %) and export growth of only 2% (2023: +4.0 %). World GDP has been further revised downward. For 2022, real, inflation-adjusted growth of 3% is still expected (average of international forecasts). At the beginning of the year, the average value was still 4.3 %, three months ago it was 3.3 %.

Tourism drivers in the summer months, industry hopes for fall

Particularly in the summer months, the Corona reopening effects should be felt strongly in the service sector thanks to the recovery in tourism. Industry is hoping for the fall, as there are signs that global supply chain bottlenecks have peaked, which, coupled with the increasing cooling of the global economy, should allow production bottlenecks to ease in the coming months. As soon as industrial companies are able to ramp up production, the Swiss economy can look forward to somewhat stronger economic tailwinds again, at least in the short term. However, this outlook assumes that there will be no interruption in energy supplies - either gas or electricity.

Vehicle market slumped

Swiss foreign trade continued to grow in the second quarter of 2022, posting new record levels in nominal terms for both directions of trade. Exports rose by 0.9 % compared with the previous quarter. In real terms, they fell by 0.5 %. Imports rose strongly by 2.4 % in nominal terms and by 0.6 % in real terms. The trade balance showed a quarterly surplus of CHF 7.6 bn. The nominal increase in exports in the second quarter of 2022 was based on the three product groups machinery and electronics (CHF +420 mn), jewelry (CHF +334 mn) and metals (CHF +223 mn). Shipments of precision instruments increased slightly compared with the previous quarter, while those of watches stagnated at a high level. Exports of chemical pharmaceutical products decreased by 1.2 % (CHF -403 million). The decline was particularly pronounced for immunological products (CHF -1.3 billion). The vehicle market slumped for both passenger cars and commercial vehicles. In the first half of 2022, 17.7 % fewer new commercial vehicles hit Swiss roads than a year ago. According to the import organization Auto-Schweiz, the supply chain problems are now also affecting motor homes.

Export prospects receive a damper

"We expect a significant damper on Swiss export growth over the next six to twelve months," comments Jan Möllmann, Co-CEO ad interim Allianz Trade Switzerland. "Reasons for this continue to be supply chain problems, which fortunately should slowly dissipate, weak demand caused by high prices, which unsettle consumers and investors, and recession risks. The likelihood of recession in important export markets such as North America and the euro zone is at a very high level. The weak economic outlook has led to a significant correction in commodity markets, except for energy. This is helping to control inflation and restore consumer and investor confidence. China's zero-tolerance policy on COVID-19 is leading to historically low growth rates in that country."

Source: Allianz Trade Switzerland