Based on the latest export data released by the FH, the Swiss watch industry recorded a rebound in August 2024 with exports rising by 6.9% year-on-year. This resurgence follows a tepid performance in July, bringing total exports for the first eight months of the year to CHF 17.1 billion. Yet, despite the uptick, the industry remains weighed down by broader economic challenges, with year-to-date growth posting a decline of 1.4%. Industry insiders are increasingly wary, projecting a negative outlook for the remainder of the year as global economic uncertainty casts a long shadow over the sector.
The August revival can be largely attributed to the strong performance of luxury watches made from precious metals, which surged by 21.2% in value. However, the performance of steel watches—the bread and butter of many Swiss manufacturers—was more concerning, with a 7.0% drop in export value. This reflects a deeper trend in the market, where the appetite for ultra-luxury products remains robust, while mid-range products are facing headwinds.
In terms of volume, the overall number of watches exported fell by 9.5%, equating to 125,000 fewer items than in August 2023. This volume decline reflects weaker demand for lower-priced watches, as watches priced under CHF 3,000 experienced a sharp drop of 14.4% in value and 11.3% in units. In contrast, watches priced above CHF 3,000 saw a healthy 14.9% increase in value, underscoring the resilience of the high-end luxury market.
The challenges faced by the Swiss watch industry reflect wider concerns in the Swiss economy. Switzerland, a nation heavily reliant on exports, has seen its economy grow more slowly than anticipated in 2024, with forecasts predicting only modest GDP growth of around 1%. This is a notable slowdown from 2023, when the country recorded growth of 2.1%. Factors such as a slowdown in global demand, rising energy prices, and a strong Swiss franc have all contributed to this deceleration.
The watch industry, which typically acts as a litmus test for Swiss exports, is now being impacted by these same dynamics. The strength of the Swiss franc, which has appreciated sharply against both the euro and the dollar in recent months, is making Swiss exports more expensive and less competitive on the global stage. This, coupled with subdued demand in key markets like China, is putting pressure on Swiss manufacturers to lower production or seek cost-saving measures.
As the Swiss watch industry navigates these global and domestic challenges, the outlook for the remainder of the year appears increasingly cautious. The sector’s dependence on the ultra-luxury segment, while offering resilience in certain markets, also exposes it to the risk of a global economic downturn. With consumer confidence faltering in many regions, especially in China, the risk of further declines in demand cannot be discounted.