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Swiss Trade Surplus Narrows

James Boston
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Swiss Trade Surplus Narrows

The Federal Customs Administration of Switzerland has released the country’s Trade Balance figures for the month of June. At CHF 1,377M for the month the surplus is down but remains healthy, this compares to a measurement of CHF 2,849M in May and a market consensus estimate for a reading of CHF 2,820M.

Exports for the month of June stood at CHF 16,866M compared to CHF 17,325M in May. Imports came in at CHF 15,489M in comparison to a May reading of CHF 14,476M.

The long term prognosis for Swiss trade is very strong, particularly since the signing of a bilateral trade agreement with China which came into force at the start of this month. Current geopolitical tensions however will naturally cause a flight to safety which would normally drive up the price of the Swiss Franc and in turn put pressure on the balance of trade as imports get cheaper and exports less competitive. The Swiss National Bank (SNB) however is still actively maintaining the artificial cap level against the Euro at 1.20, defending this rate remains sustainable for now given the fire power of the SNB but a further heightening of international tensions around the Russian situation will likely increase the pressure on the Swiss Franc to appreciate and this will make the SNB’s task all the more challenging.

A further threat to Swiss trade is likely to come in the form of an agreement between the EU and the US. The Transatlantic Trade and Investment Partnership (TTIP) currently being negotiated between Brussels and Washington will be the largest and most complex free trade agreement of its kind if completed successfully. The risk for Switzerland is that it’s two main trading partners effectively lock it out of this deal, there have not been any moves from Bern yet to signal that it wants part of this deal, however a failure to get involved could have significant costs to the Swiss economy in the future.

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