Swiss watch exports have taken a direct hit from global economic uncertainty. According to a report by the Swiss Watch Industry Federation (FH) on the 20th (local time), Switzerland's watch export value in February this year was 1.98 billion Swiss francs (about 3.3 trillion won), a decrease of 8.2% compared to the same period last year. The number of watches shipped from Switzerland was recorded at 1,100,300, down 8.2% from a year ago.
Exports to China, the major export market, decreased by 25% during the same period, and exports to Hong Kong also fell by 12.5%. Hong Kong and China rank second and third, respectively, in Swiss watch exports, but watch consumption in these countries has been declining due to the economic difficulties that have persisted since last year.
Notable is the decrease in exports to the United States. Last month, exports to the U.S. amounted to 3.4 million Swiss francs, down 6.7% compared to the same period last year. The United States was seen as an alternative market for luxury good companies amid shrinking consumption in the Chinese market, and last year alone, it had shown solid export volumes.
The FH noted, "In February, significant declines in export volumes were observed in most major markets." Analyst James Grzywacz of Jefferies stated, "While the weakness in the China cluster has been ongoing, the major adverse factor for the Swiss watch industry recently has been the slowdown in demand from the U.S."
The Swiss watch industry enjoyed unprecedented prosperity from 2021 until mid-2023 during the COVID-19 pandemic. Because of border closures that made overseas travel impossible, consumers spent the abundant cash resulting from government quantitative easing on luxury purchases.
However, since the year before last, the global economy has entered a recession phase that has significantly reduced demand in major export markets. Moreover, the uncertainty caused by the tariff war triggered by the Donald Trump administration is expected to further dampen watch demand.
The Wall Street Journal (WSJ) reported, "Due to weakness in China, the U.S. is expected to become a positive market for luxury brands," while stating, "However, market analysts believe the market growth seen in the fourth quarter of last year is unlikely to continue into the first quarter of this year. This is due to the imposition of tariffs linked to trade."
Bloomberg reported, "Last month, the U.S. consumer confidence index experienced its largest drop since August 2021," and evaluated, "Uncertainty surrounding President Trump's policies is affecting U.S. consumer expenditure." The U.S. consumer confidence index for February was 98.3 (1985=100), a drop of 7 points from January.
The shipment of watches priced at 3,000 francs (about 4.99 million won), which account for more than 80% of Swiss watch exports, decreased by approximately 7.3% in terms of value, while exports in the price range of 500 francs (about 830,000 won) to 3,000 francs fell by 15.4%. In contrast, watches priced below 200 francs (about 330,000 won) increased by 2.7% compared to last year.