ZURICH, Sept 20: Swiss exports grew robustly in August, led by the key chemicals and pharmaceuticals sectors, suggesting the economy is holding up well despite slowing global growth as firms are managing to ride out the impact of a strong franc.
Exports rose 4.4 percent year-on-year in August to 15.54 billion Swiss francs ($16.76 billion), accelerating from growth of 0.8 percent in July, the Federal Customs Office said on Thursday.
‘It is astonishing that exports continue to keep up so well,’ said Sarasin economist Jan Poser, ‘In view of the strong Swiss franc, one would expect worse.’
Swiss exporters have been helped by a cap the central bank imposed on the soaring franc at 1.20 per euro a year ago even though many still see the safe-haven currency as too high.
The economy had been holding up surprisingly well overall given the turmoil in the euro zone, its biggest trading partner, until the second quarter, when it unexpectedly contracted.
At its quarterly policy review last week, the Swiss National Bank affirmed its determination to defend the cap, which it set to prevent deflation and a recession, due to slowing global growth – despite signs the euro zone crisis could be easing.
The franc touched an eight-month low of 1.21831 per euro on Monday as euro zone investors were cheered by the European Central Bank’s bond-buying plan. The franc has since pared some of those losses but was little moved by the release of the trade data, trading flat at 1.2082 per euro at 0748 GMT.
The trade data pointed to broad-based resilience, with nearly all sectors seeing a rise. Exports by the chemicals and precision instruments industry grew 19 percent while the machine and electronics industry – the country’s no. 2 segment – climbed for the first time in 13 months.
‘This shows how flexible Swiss companies are. They have taken the right measures and are hedging,’ Poser also said.
SNB SEEN KEEPING LID ON FRANC
The prices of exported goods rose 7 percent in August from a year earlier, the trade data showed, a development which Credit Suisse economist Maxime Botteron said indicated the cap on the franc was proving useful.
‘Higher export prices are certainly also good for the SNB as it shows the deflationary risks that they were pointing to are clearly diminishing and this is why we think the floor for the euro-Swiss franc is at the right level and we don’t see it increasing now,’ he said.
A survey by Credit Suisse and the German ZEW research institute showed 95 percent of financial market experts expect the franc cap to stay in place at least until March.
Growth of exports of watches, long the most resilient of Swiss industries, slowed to a real 5.2 percent in August from 6.9 percent the previous month, although sales to China picked up again slightly after a slump in the previous month.
Exports of watches, such as those made by Swatch Group and Richemont, grew by a nominal 11.1 percent to both the United States and Hong Kong, the biggest single export destination of Swiss watches.
($1 = 0.9273 Swiss francs)
(agencies)
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