(19 FEBRUARY 2019)DAILY MARKET BRIEF 1:Switzerland’s trade activity bounced back in January

After a disappointing end to 2018, Swiss external trade started the year on a solid footing with exports rising 1.1% m/m (nominal, seasonally adjusted) to CHF 18.9 billion, thanks to a bounce back in demand from Asian countries (+9.3% m/m). Imports increased 3.4% to CHF 17.5 billion. The trade surplus printed at CHF 1.4 billion. In real terms, exports climbed 0.8% m/m, while imports were up 4.8%, the largest increase since July 2016 (+8.6% m/m). Exports to the European Union contracted 1.3% m/m, while those to North America (US and Canada) decreased 3.2%.

Overall, Swiss trade activity has continued to improve despite a strong Swiss franc. Exports kept expanding throughout 2018. Nevertheless, the trade surplus has continued to narrow due to the faster increase in imports.

Switzerland's trade activity has become more volatile over the last six months as trade tensions took centre stage. In addition, Switzerland is exporting more and more to China (10% of total exports compared to less than 3% a decade ago) and to the US (12% compared to 8% a decade ago). By comparison, the share of exports that goes to countries from the European Union has never recovered from the Swiss franc appreciation following the GFC. Indeed, before the crisis more than 55% of total exports went to the EU, today it is less than 40%. Switzerland will have no choice but to develop good trade relationships with more and more countries, especially as the economy of its main trade partner is slowing down.