Swiss tech industry struggles with declining sales and exports, but stabilization signs offer hope for recovery in 2024.

The Swiss tech industry, including mechanical, electrical, and metal industries (MEM) and related sectors, continues to face a challenging environment.

In the first quarter of 2024, sales among member companies fell by 5.4% and orders by 2.3% compared to the same period last year. Additionally, exports of goods dropped by 8.5%, according to the umbrella organization Swissmem.

The business situation remains difficult, particularly for large companies, while smaller companies (SMEs) experienced a lesser decline in sales. Production capacity utilization was at 85.5%, below the long-term average of 86.2% for the first time since the third quarter of 2021.

Despite these challenges, Swissmem reports some positive signs. Orders from abroad have stabilized, and domestic orders have even improved, suggesting that the downturn may reach its bottom this year.

Geopolitical uncertainties and increasing protectionism remain risks, impacting the global economy and the tech industry, which exports around 80% of its goods. The trade war escalation between the USA and China poses a significant threat.

Exports fell in almost all markets in the first quarter, contributing to an 8.5% overall decline. The tech industry exported goods worth 16.9 billion francs. Exports to Europe saw the steepest drop at nearly 12%, while exports to the USA and Asia declined by 2.6% and 0.9%, respectively. Exports to Germany, the industry’s most important single market, fell by 12%. However, exports to China and India increased by over 7% and 8%, respectively.

The Purchasing Managers’ Indices (PMI) in key markets like the USA and Europe remain below the growth threshold, indicating a challenging business environment. Only 28% of Swissmem companies expect an increase in incoming orders from abroad in the next twelve months, though the percentage of companies expecting a decline in orders has decreased from 37% to 28%.

©Keystone-SDA