Pandemic and CHF Rate hit Swiss Watch Exports24 November 2020
Swiss watch export industry is reporting the worst year in 80 years, whereas Swiss government prepares financial economic aid.
Exports Of Watches Plunges
Swiss watch exports industry is on the track to report the biggest annual decline in 80 years as due to pandemic of COVID-19 demand for luxury goods is hurt as well as tourism. From January to October exports of Swiss watches plunged 26%, whereas shipments fell 7.1% to 1.9 billion francs in October – the smallest percentage decline this year, as previous months were even worse. Data was reported by the Federation of the Swiss Watch Industry. Meanwhile Morgan Stanley predicts that Swiss watch export will end the year with 32% decline in volume – to 14 million units, and 19.5% fell of value of export to CHF 16 billion. When it comes to value of sales this means making a step back to 2010 – as if decade of progress was lost. In terms of volume the number is lowest since 1946, standing as only half the number sold in 2011 when record 29.8 million units were shipped. Swiss export is not only damaged by the pandemic but also due to overvalued CHF exchange rate as in difficult times investors buy Swiss francs a lot, triggering its very good exchange rate versus other currencies, like euro.
Swiss Watch Industry to Recover?
When the industry of Swiss watches – one of most luxurious and popular export product of the country – is predicted to recover? As currently the second wave of COVID-19 pandemic is observed in Europe and US, no one can say for sure how long crisis will last. China managed already to bounce back to good domestic demands, but there the pandemic started earlier and ended much earlier. For now, outlook is still pessimistic, as the Federation put it in its statement. The Swiss watch industry is country’s third largest exporter and one of main pillars of its economy, so everyone thinks it will recover at some point or adapt to new conditions. Still, the year 2020 will be considered as one of its worst in history.
Not only export watches industry is struggling in Switzerland, as lockdown in spring and partial restrictions implemented now influence events, tourism, hotels, restaurants industries. Many companies are struggling to survive. The Swiss government is preparing a new financial aid package for companies affected by restrictions due to the COVID-19 pandemic. The proposal covers 200 million Swiss francs (around 219 US dollars as per average exchange rate) in grants for companies across the country. The specific details of aid will be decided by each of the country’s 26 cantons but should match the government’s funding. Grants given to each company can’t exceed 10% of its revenue at the end of 2019. Meanwhile loans should be limited to 25% of 2019 sales and can’t be higher than 10 million francs. The measure will be up for discussion now, and if all goes well, should be implement in December. Additional steps are taken by the federal government to help self-employed and other employees.