Swiss industry warns of ‘precarious’ 2024 as franc weighs
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ZURICH, Feb 29 (Reuters) – The outlook for 2024 is uncertain, a group representing Switzerland’s engineering and technology-linked sector warned on Thursday, as Swiss industrial companies wrestle with a strong domestic currency and a slowdown in major markets like Germany.
Switzerland’s technology sector reported a 2.6% drop in exports last year, said Swissmem, a trade association whose members include engineering groups ABB and Siemens , and liftmaker Schindler.
That decline in export value to 70.5 billion Swiss francs ($80.20 billion) came amid lower shipments to the European Union, Asia and the United States.
Manufacturing is a major part of Switzerland’s export- orientated economy, contributing around 22% to its GDP. More than three-quarters of Swiss-made products are shipped abroad.
Swissmem said the downturn was primarily due to industrial recessions in practically all major markets.
The safe-haven Swiss franc, which jumped 6% versus the euro and nearly 10% versus the dollar last year, was also a bane for domestic companies, making their products more expensive abroad.
The Swiss National Bank is due to announce its next policy decision on March 21, and market participants expect there is a 59% chance of an interest-rate cut.
New orders, a signal for future growth, fell 8.4% in 2023, although there were some signs of improvement, Swissmem said.
“Together with the slightly positive trend in the purchasing managers’ indices and the latest currency adjustments, this gives us hope that the downturn may bottom out in mid-2024,” said Swissmem president Martin Hirzel.
While some 27% of companies surveyed said they expected increased orders from abroad this year, 37% expect a decline.
“The situation is very precarious,” said Hirzel. “The Swiss franc remains overvalued by around 5% against the euro compared with purchasing power parity. Another appreciation surge or political shock could quickly exacerbate the downward spiral.”
