Swiss Industry Preparing for Coronavirus Impact. EUR CHF falls10 February 2020
Industry and tourism sectors in Switzerland are bracing themselves for a possible economic impact of the coronavirus epidemic spreading from China, which is one of the biggest trading partners for the country. Meanwhile, the euro exchange rate continues to fall and is currently reaching a value of EUR CHF 1,067 which is close to the recently reached 3-year low.
Important Trading Partner
China is the third biggest trading partner for Switzerland – only the European Union and the United States are larger. Last year in first three quarters China received CHF15 billion of Swiss exported good, whereas from China to Switzerland came in import worth CHF11 billion. That is why the ongoing epidemic of the coronavirus can case serious damage to import and export figures on the line of Switzerland and China, and also may influence the Swiss franc exchange rate. On the one hand, worse industry performance can made CHF exchange rate go lower, but in times of turmoil many investors decide to buy Swiss franc, which is considered a safe-haven asset, so the price might go up. The coronavirus has infected around 28,000 people so far, and more than 560 has died.
Swiss Industry in China
Since the outbreak of the coronavirus epidemic, many Swiss companies that operate in China have suspended or scaled back production while letting staff stay at home in order not to be in danger of getting the virus. For instance, the Swiss engineering company ABB has been forced to close all its production plants in mainland China, which is its second-largest market worldwide. Together Chinese operations make up for 15% revenues of ABB – last year it was approximately $4 billion or CHF3.9 billion. Chemicals firm Zofinger had to shut down its construction works on new plant – since January 25 no operations are conducted. Whereas the pharmaceutical worldwide giants Roche and Novartis have ordered a huge part of their employees in China to leave laboratories and work at home – Novartis has 7,000 staff in China, whereas Roche – 10,000. These companies claim they are prepared for such scenario and have emergency plans to cope with it. Electrical engineering, machine building or precision tools sectors are not sure yet what will be the impact of the coronavirus on their production in China and revenues, but the body representing those industries in Switzerland claims some firms were forced to scale back or suspend production as of now.
Swiss Watch Exports
Other industry that might be vastly influenced by the coronavirus epidemic is Swiss watch exports. The prestigious branch already has had a tough time, when last year riots in Hong Kong hurt its revenues. Due to the coronavirus epidemic, the largest watch manufacturer from Switzerland, Swatch, has to cancel its watch fair called Time to Move, scheduled at the end of February in Zurich.
Chinese love to come to Switzerland and spend big on hotels, restaurants and goods. Due to the coronavirus epidemic many connections between China and other countries were suspended. Swiss International Air Lines together with its parent company, German Lufthansa, have suspended flights to and from Shanghai and Beijing till the end of month, and other destinations are also affected by the coronavirus scare. Swiss tourism is estimating that a 30% to even 50% drop of Chinese visitors could be observed in next weeks. That could mean that even 70,000-100,000 overnight stays per month will be a no-show, as based on 2018 figures of Chinese visitors to Switzerland.