PARIS — Swiss watch exports are set to fall by 10 percent in 2016 as a prolonged slump in Hong Kong is compounded by terrorist attacks and currency imbalances, the Federation of the Swiss Watch Industry forecast on Thursday.
It also announced that watch industry exports fell 16.1 percent in June, their sharpest monthly decrease so far this year, as sales to Hong Hong — the world’s number-one market for Swiss timepieces — plummeted by almost 30 percent.
Exports in June totaled 1.63 billion Swiss francs, or $1.69 billion at average exchange rates for the period. In the first half as a whole, they were down 10.6 percent compared with the first six months of 2015.
“The Hong Kong market failed to recover; this had a preponderant impact on the overall result. The overpriced Swiss franc, insecurity linked to terrorism and changes reported in tourist flows also penalized demand for Swiss watches,” the federation said in a statement.
“While Europe still held up to some extent in the first quarter, all the regions are affected by the downturn today. The forecast for 2016 has worsened significantly. Despite a potential very slight improvement of the situation in the second half, the year-on-year result is likely to show a downturn comparable to the figure recorded at present,” it added.
All key markets were in decline in June. Hong Kong receded 29.2 percent, marking its 17th consecutive month of declining sales. Italy was down 28.2 percent; Germany 15.4 percent; the U.S. 8.5 percent; China 6.5 percent, and Japan 4 percent.
The declines were led by precious metal watches, which saw sales drop 31.4 percent in value terms. Steel timepieces posted a 6.2 percent decline, while gold-and-steel watches were down 5.4 percent.
The sales drop was reflected in all price categories. Watches priced between 200 Swiss francs and 500 Swiss francs, or $206 and $516, posted a 19.8 percent sales decrease in value terms. Watches priced above 3,000 Swiss francs, or $3,095, fell 19.5 percent. Timepieces priced between 500 Swiss francs and 3,000 Swiss francs fared relatively better, with a 6.5 percent decline.
Thomas Chauvet, analyst at Citi, said the June figures reflected elevated inventory levels among third-party distributors in Asia and a cautious mood among watch retailers.
He expressed concern about the continued disruption in Hong Kong and mainland China, three years into the Chinese government’s historic anticorruption campaign, which has severely dented demand for luxury timepieces.
“Swiss watchmakers also depend on the health of global tourism, and with terrorist events in Europe and a stronger Japanese yen and U.S. dollar, tourist-related demand has been impacted,” Chauvet said in a research note.