Exports to China dropped by half in February compared to the year before. (© Keystone / Peter Klaunzer)
The closure of shops caused by the spread of the coronavirus worldwide will cost Swiss watch firms dear, but exports are expected to rebound next year.
“The Swiss watch industry will experience the largest decline in the past 50 years,” says a study published by private bank Vontobel on Wednesday. The projections are based on the assumption that stores will be open again in May or June.
The anticipated 25% drop in exports in 2020 is even “slightly larger than that recorded in 2009 (-22%) during the financial crisis”, said analyst René Weber.
Watch exports are expected to fall by more than 30% in March, following a 9.2% decline in February during which China, the origin of the pandemic, saw a decline of 50% compared with the previous year. For the second quarter of 2020, a 40% drop in the sector’s exports is expected.
Production is also an issue. Watch manufacturers such as Rolex, Audemars Piguet, Patek Philippe, Hublot and Tag Heuer have temporarily closed their production sites. Others like Swatch have resorted to reduced working hours.
Rebound expected
With a possible resumption of activities in May or June, the second half of the year should show an improvement, according to the report.
Currently, stores have started to reopen in China even though the number of customers remains modest. Businesses began closing at the end of January, while in Europe and the US it was in mid-March.
According to the report, the watch industry should bounce back to post an increase of around 15% in 2021, as in 2010 (+22%).
The industry was enjoying good business until the coronavirus restrictions hit it. In 2019, the Swiss watch industry recorded an increase of 2.4% or CHF21.7 billion ($22.5 billion) in its exports.
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