Above-average export growth expected
The Euler Hermes Export Forecast expects export growth to remain above average. The USA has replaced Germany as Switzerland's most important export country. The global economy will continue to recover, although negative indicators on the financial markets, the uncertain development of the Corona pandemic, and the Ukraine conflict are curbing the euphoria.
In the first quarter of 2022, the Euler Hermes Export Forecast is again well above the zero-point threshold at 0.69 points, which indicates the long-term average growth path of the Swiss export industry. Despite a decline of 0.26 points compared with the previous quarter, the indicator shows above-average export growth of around 10 percent. Over the past 20 years, it has only been higher in 20 percent of cases.
Industry remains under pressure
As before, the Industry due to persistent supply bottlenecks under great pressure. As a result, the Swiss economy is likely to get off to a rather modest start this year. Companies are holding back on major investments, and consumption is suffering from the current wave of omicron and the sharp rise in inflation. Despite these dampeners, thanks to strong growth impulses from the chemical, pharmaceutical, IT and financial services sectors, no renewed economic slump is currently expected, according to Euler Hermes. "The economic outlook is likely to brighten significantly again as early as spring," predicts Euler Hermes European economist Katharina Utermöhl. "Then both supply chain stress and, consequently, inflationary pressures will gradually ease. At the same time, accompanied by a slowdown in infection, private consumption will shift up a gear again. Accumulated private savings, the good labor market situation and high capacity utilization provide fertile ground for a robust recovery." Overall, Utermöhl expects global trade to grow by 5.4 percent in 2022 (2023: +4.0 percent). GDP is expected to increase by 3.0 % (2023: +1.8 percent). This would mean that economic growth would slow down compared with 2021, but the Swiss economy would still grow at an above-average rate.
Switzerland with world's highest purchasing managers' index
Despite good chances of a further recovery of the global economy, there are risks which could impact the economy: The Corona pandemic, negative indicators on the financial markets and the war on the Russian-Ukrainian border. The war is likely to put additional strain on trade flows, which are already impaired. "Of course, Switzerland could not escape additional stress on world markets," comments Stefan Ruf, CEO Euler Hermes Switzerland, "but Swiss industry is doing very well. This is indicated by the J.P. Morgan Global Manufacturing (PMI), the most important gauge of industrial purchasing managers. Switzerland has 63.8 points in it. No other country in the world has a higher value. This proves Switzerland's strong competitive position. Also helpful is the portfolio of destinations broadly diversified by exporting companies." Globally, the PMI stood at 53.2 points. This is a decrease compared to the previous quarter (54.3). Growth rates in new orders fell. New business growth was the weakest in a year and a half. New export business contracted for the first time in more than a year in both the consumer goods and intermediate goods sectors. The overall outlook for global manufacturing remains positive. The growth outlook, combined with the clearing of backlogs following recent delays in supply chains, is also encouraging further job creation. Headcount increased in the euro area, the U.S. and Japan in January. In China and India, the number of employees decreased.
Above-average export growth, especially to the USA
In 2021, Swiss exports grew by 15.2 percent to a new record level, while imports increased by 10.1 percent. This boosted the surplus in the balance of trade to 58.7 billion Swiss francs. The Swiss export industry was able to sell more goods in all three major economic regions. Deliveries to Europe (+18.1 percent) and North America (+17.0 percent) showed double-digit growth. Exports to Asia rose by 9.0 percent. The USA replaced Germany as Switzerland's most important export country. Imports were boosted by increased purchases of chemical-pharmaceutical products (+7.1 percent), especially immunological articles, and food and beverages. The jewelry and automotive sectors, which had still been hit in the previous year, recorded increases of 2.8 percent and 2.4 percent respectively.
Source: Euler Hermes
