Swiss trade surplus grew, investment income fell

Zurich, Switzerland (GenevaLunch) - Switzerland’s net investment earnings are negative for the first time since the Swiss National Bank (SNB) began compiling statistics in 1947, ironically, as a record trade surplus was posted for 2008. Losses from Swiss banks’ foreign subsidiaries caused 2008 income from direct investment abroad to fall sharply, from CHF60 to 8 billion. Meanwhile, the trade surplus for 2008 widened by CHF5b to CHF19b, as exports grew and imports fell. The impact of the global economic crisis affected trade figures only in the fourth quarter, after three quarters of strong growth.

Net investment earnings show the earnings from Swiss investments abroad, minus payments to foreigners on their investments in Switzerland. This is historically a large surplus because of the earnings of Swiss multinationals, including banks. Their earnings have been declining, but the bailout solutions for bank UBS meant yet more money flowed out of Switzerland.

Switzerland’s current account surplus fell from CHF52 billion to CHF13b: in relation to GDP, the surplus amounted to 2 percent, the lowest level since the beginning of the 1980s. In 2007, the figure was 10 percent.

The SNB published the data Thursday morning 13 August, commenting: “The financial crisis had a marked impact on the Swiss balance of payments. In particular, it affected receipts from direct investment abroad, which dropped significantly. The heavy  losses by banks’ foreign subsidiaries were the main reason for this decline. Indeed, these losses were so severe that receipts were lower than expenses both in the case of investment income from direct investment and investment income overall.”

SNB data on Swiss balance of payments, 13 August 2009 (pdf)

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