Global downturn hits Swiss exports

By Sven Egenter

ZURICH (Reuters) - Swiss exports fell sharply in September, according to data on Tuesday that indicated the country's economy was being hit by the global economic downturn.

The sharp slowdown of Switzerland's traditional growth driver exports and a drop in one of the Swiss National Bank's core inflation gauges to a 2-1/2 year low bolstered analysts' views that the central bank would cut interest rates again soon.

"Given the recent sharp downturn in the growth outlook (which is also expected to put further downward pressure on inflation) we expect the SNB to ease rates further at its next meeting in December after the surprise cut this month," said Saara Tuuli, economist at 4Cast.

Exports were 8.2 percent lower than the previous month after taking into account price swings and seasonal factors, the Federal Customs Office said.

Exports were 4.8 percent higher than a year earlier in real terms but once adjustments had been made for two extra working days in September 2008, the data showed they actually declined by 4.4 percent over that period.

The fall in working day adjusted exports was the first since January 2005, the office said.

"The negative result is mainly due to the weak performance of the chemicals industry," the office said.

Switzerland ran a trade surplus of 1.44 billion Swiss francs, largely unchanged from August, as exports stood at 17.5 billion and imports at 16.1 billion.

Swiss exporters' focus on high-end products such as machinery, drugs, watches or chocolate has shielded the Alpine economy from some of the global economic slowdown.

Swiss watch makers recorded above-average export growth with nominal exports up 15.1 percent at 1.53 billion francs, driving the share price of Swatch Group (UHR.VX) up by over 7 percent.

But many economists see Switzerland following other European countries into a recession as the global outlook worsens.

"Exports to Britain and Spain for example are really slumping already," said ZKB analyst David Marmet "That heralds more bad news when you think that Britain is in a recession now, which other countries are likely to see in the coming months."

"The Swiss economy overall will suffer and might fall into a recession," he said.

OFF THE TABLE

The SNB said the global economic outlook had worsened when it cut its target rate for the 3-month Swiss franc LIBOR by a quarter percentage point to 2.5 percent on October 8 in a move that was coordinated with other major central banks.