Export prospects: Six months to the growth zone

In recent months, the Swiss Euler Hermes Export Forecast has steadily increased: At -0.35 points, it is currently significantly higher than three months ago (-0.93). However, the indicator continues to trend below the long-term nominal trend growth of 4.2 percent per year. The current barometer reading indicates that Swiss exports should return to the growth zone in three to six months. Temporarily, therefore, the official foreign trade figures are likely to be rather weak to moderate. Although there are signs of an improvement for Europe as a whole, this is at a low level.

Robust domestic economy worldwide

The robust domestic economy, which is reflected in solid employment, is having a stabilizing effect worldwide. This in turn supports consumer confidence and actual consumption. Record high stock prices are also having a stimulating effect; the stress indices on the financial markets have reached new lows. Global trade has bottomed out and, according to Euler Hermes, will grow by 1.7% in 2020 (2019: 1.5%). This trend is also underpinned by rising freight prices and higher metal prices, among other factors.

Return to the growth zone

"The Euler Hermes Export Forecast persistently quoted in the negative zone in 2019, which indicated below-average growth. The negative reports based on Switzerland's official foreign trade statistics for Q4 were therefore not surprising," said Stefan Ruf, CEO of Euler Hermes Switzerland. "It is now positive that the Euler Hermes Export Forecast shows a trend reversal. Therefore, the current weak phase of the Swiss export industry is likely to be of a temporary nature. However, the medium-term slowdown in the US - despite the new positive momentum in Asia - rather argues for a flat upward trend."

Quarterly assessment of export development

The Euler Hermes Export Forecast predicts the likely development of Swiss exports in the coming months. It is published quarterly and is based on a broad and up-to-date database. Leading indicators of industry, transport, financial and commodity markets as well as new sentiment indicators are taken into account. Finally, around 100 components are incorporated into a dynamic, predictive model. Compared with the actual exports of the Swiss export industry, the Euler Hermes Export Forecast has a lead time of around six months.

Tool for the assessment of future development and risk management

The Euler Hermes Export Forecast aims to show the medium-term trend of Swiss exports and imports and is a practical tool for estimating future export developments. Swiss exporters should use the Euler Hermes Export Forecast to strengthen their risk management. Exports and the international flow of goods are generally considered to be very solid leading indicators of economic activity - after all, producers often need to source inputs, such as raw materials and intermediates, abroad. This makes the Euler Hermes Export Forecast - as a leading indicator of the leading indicator, so to speak - one of the best economic indicators available.

Source and further information: Euler Hermes Switzerland