Swiss Exports Rebound From Biggest Slump in 11 Years

By Joshua Gallu and Simone Meier

Feb. 19 (Bloomberg) -- Swiss exports rebounded in January after dropping the most in at least 11 years in the previous month.

Sales abroad adjusted for seasonal swings and inflation, increased 6.7 percent from December when they declined 13.1 percent, the Federal Customs Office in the capital Bern said today. Imports rose 0.8 percent from the previous month and the trade balance was at 2.03 billion Swiss francs ($1.7 billion).

Swiss companies may still see orders dwindle over the coming months as deepening recessions in Europe and the U.S. cut into demand such as for watches. Zurich-based ABB Ltd., the world’s largest builder of electricity grids, on Feb. 12 reported a 19 percent decline in fourth-quarter orders, with Chief Executive Officer Joe Hogan calling the outlook “very uncertain.”

“When you see the data coming out of other countries, it doesn’t look very good for Switzerland’s exporters,” said Alessandro Bee, an economist at Bank Sarasin in Zurich. “Even China is importing less, and the lower oil prices mean oil- producing countries won’t be spending as much.”

Swiss companies are forced to cut spending and output to weather a global economic slump. The world economy will probably expand just 0.5 percent this year instead of 2.2 percent, the International Monetary Fund said on Jan. 28. That’s the weakest global expansion since World War II.

Less Competitive

The Swiss franc has gained 3.6 percent against the euro over the past four months, making exports less competitive abroad just as Europe’s economy slides deeper into a recession. The German economy, Europe’s largest, contracted 2.1 percent in the fourth quarter from the previous three months.

Swiss exports dropped 11.5 percent from a year earlier when adjusted for inflation with demand for food products such as chocolate declining 5.8 percent, today’s report showed. The metals industry reported a 28 percent drop in exports and machinery and electronics companies saw foreign sales fall 18.7 percent in the year. Watch exports slipped 28.6 percent.

Givaudan SA, the world’s largest maker of fragrances and flavors, on Feb. 17 reported lower-than-expected full-year profit. The Vernier, Switzerland-based company expects markets to be flat “at best” in 2009, CEO Gilles Andrier said.

In January, imports declined an inflation-adjusted 11.9 percent from a year earlier, the customs office said. Demand for investment goods dropped 6.8 percent and imports of consumer goods fell 0.6 percent from January 2008. Companies trimmed imports of raw materials and semi-finished goods by 23 percent.

Switzerland’s economy may shrink by more than 1 percent this year, central bank Governing Board member Thomas Jordan said on Feb. 16. By comparison, the government currently forecasts a contraction of 0.8 percent this year.

To contact the reporters on this story: Joshua Gallu in Zurich at jgallu@bloomberg.net; Simone Meier in Frankfurt at smeier@bloomberg.net.