Uncertainties surrounding the international economic climate coupled with an overvaluation of the Swiss franc have affected how small- and medium-sized companies (SMEs) in Switzerland perceive their export outlook, according to a recent survey conducted by Swiss business network centre Osec.

Osec’s survey of over 200 Swiss SMEs reveals that although export growth has so far been positive, there are now clear signs of growth either slowing down or stagnating in the final quarter of the year, with the vast majority of Swiss SMEs experiencing pressure on margins.

Faced with a strong Swiss franc, almost three quarters of export-oriented Swiss SMEs surveyed (73%) expected growth in exports to slow in quarter four (significantly up from 67% in the third quarter, and from 55% in Q2). The metal industry, the precision instruments and machinery industries have been most affected by the exchange rate development, while the service sector remains relatively unaffected.

Highlighting significant variations between the individual sectors as regards the export outlook, the survey reveals that only 32% of companies expected growth in exports during the coming quarter, compared to 45% at the mid-year stage, while 28% of businesses questioned predicted a decline, compared to 13% at the start of the third quarter, and 40% anticipated stagnation (against 41% in the previous quarter).

Companies forecasting a growth in exports in the months ahead attributed the positive outlook predominantly to product innovation (47%), to increased marketing efforts (45%), and to a change in pricing policy (28%).

In stark contrast, Swiss SMEs predicting a decline in exports cited the economic downturn as the primary cause, followed closely by competition pressures, and by a drop in prices.

Given the factors cited by Swiss SMEs as decisive for success abroad, it is understandable that the majority of small businesses surveyed expressed their intention to invest as much if not more in marketing and product innovation. In stark contrast, businesses were hesitant, however, as regards investing in recruitment.

Despite difficulties linked to the strong franc and to the worsening crisis in the eurozone, Europe remains by far the most important destination region for Swiss exports, according to Osec’s survey.

Indeed, 91% of companies surveyed expected to export to Europe in the course of the next six months, while 49% of Swiss SMEs anticipated exporting to the Asia Pacific region, 38% to North America, 27% to the Middle East and Africa and 25% to South America.

Confirming the survey’s findings, and underscoring the adverse effects of the strong Swiss franc on foreign trade, the Swiss federal customs administration noted in a recent release that exports fell in August by 4.1% in nominal terms to CHF13.9bn, while imports dropped by 6.4% to CHF13.1bn.

Strikingly, the administration pointed out that exports in all sectors either declined or stagnated, with the exception of the watch-making industry.

Alluding to the fact that the strong Swiss franc is also affecting business formation in the Confederation, the Swiss federal administration published figures recently showing that in September growth of the total number of companies listed in the commercial register was down 17.4% from last year.

However, given an exceptional first half of 2011 in terms of business formation, a record number of new companies were registered in the first nine months of the year (29,404), up 7% from 2010, the administration added.

In its release, the administration noted that from January to September the number of new company listings in the trade register was up from the previous year in all regions of the country. The Swiss canton of Bern showed the weakest increase (up 3.2%), while the greatest increase was recorded in Western Switzerland (up 12%).

Osec’s survey of over 200 Swiss SMEs was carried out prior to the Swiss National Bank’s announcement of plans to set the minimum exchange rate at CHF1.20 per euro. It remains therefore to be seen as to whether or not the decision will have an impact on the export outlook of Swiss SMEs in the coming quarters.