Swiss Exports Fall First Time Since 2005 on Global Economy

By Joshua Gallu

Oct. 21 (Bloomberg) -- Swiss exports declined for the first time in almost four years in September as slowing economic growth around the world damped new orders.

Sales abroad, adjusted for inflation and working days, fell 4.4 percent from a year earlier, the Federal Customs Office in Bern said today. That's the first annual decline since January 2005. From August, exports dropped 8.2 percent.

Growth in foreign sales may slow in the coming months as a sputtering global economy cuts into purchases of machines and technology. Nobel Biocare Holding AG, the world's biggest maker of dental implants, saw third-quarter revenue drop on slowing demand in North America and Europe and warned it may not meet its sales targets this year.

``Exports to countries like Spain and the U.K. are contracting significantly, and that will be the case with sales to other European countries as they fall into recession,'' said David Marmet, an economist at Zuercher Kantonalbank in Zurich. ``Export growth is probably going to drop off massively in coming months.''

Shipments of Swiss products to the U.K. dropped 23 percent and sales to Spain fell 12 percent. Sales to Germany, Switzerland's biggest export market, increased 5.1 percent.

The International Monetary Fund forecast Oct. 7 that global growth will slow to 3 percent in 2009, from 3.9 percent this year and 5 percent in 2007. That would mean a world recession under the fund's informal definition.

Market Turmoil

Stock markets plunged this month as concerns the banking system may collapse rippled through the world economy. That is sapping confidence just as the U.S. and Europe slip toward a recession, forcing central banks to slash interest rates and governments to rescue financial institutions.

Switzerland's government estimated in September that the rate of expansion in foreign sales will drop to about 3.4 percent this year from about 10 percent in each of the previous two years. Exports will probably grow about 2.3 percent in 2009, the government said.

Logitech International AG, the world's biggest maker of computer mice that's based in the Swiss town of Romanel-sur-Morge, today cut its forecasts for sales and profit, citing concerns over slowing economic growth.

With foreign sales slowing and financial-market turmoil hurting banks' earnings, two of Switzerland's main engines are stalling. The Swiss economy will probably slip into recession at the start of next year, the Zurich-based KOF economic research institute said Sept. 29, forecasting that growth will reach 1.9 percent this year before slowing to 0.3 percent in 2009.

Weary Engine

``Exports were one of the most important growth engines for Switzerland,'' said Felix Brill, an economist at UBS AG in Zurich. ``This is going to weigh on growth.''

Still, some exporters are seeing sales grow. Sales to China rose 16 percent form a year earlier and exports to Brazil jumped 48 percent, today's release showed. Wealthy individuals in the Middle East and Asia are also purchasing more Swiss timepieces. Watch exports increased 15 percent last month, the fastest pace in five months.

Imports declined an adjusted 3.2 percent from August and fell 2.1 percent from a year earlier. The trade surplus reached 1.44 billion francs ($1.25 billion). Economists expected the surplus to narrow to 1.20 billion francs, the median of three forecasts in a survey by Bloomberg showed.

To contact the reporters on this story: Joshua Gallu in Zurich at jgallu@bloomberg.net