EULER HERMES EXPORT FORECASTApril 2020

The Swiss Euler Hermes Export Forecast has been caught up in the shock waves of the coronavirus pandemic. At the start of April, the leading indicator for the Swiss export economy stood at –1.31 points (–0.8 points versus the previous quarter). The recovery trend seen at the start of the year has been stifled.

The Swiss Euler Hermes Export Forecast has fallen to a multi-year low of –1.31 points. The last time it sank to this level was in April 2009, at the height of the financial crisis. Difficult times lie ahead for Swiss exporters.The positive factors seen at the start of the year have reversed, and the lockdown ordered by the authorities has placed the service sector in an artificial coma. Despite government assistance programmes, the consequences for consumer confidence and employment levels are likely to be grave. At the start of April, almost one in four Swiss employees were receiving short-time working compensation, and many companies are thought to have introduced hiring freezes. According to our surveys, the number of vacancies is 31% lower than last year. Although the movement of goods is excluded from the emergency laws passed in Switzerland and elsewhere, there is a risk that dangerous domino efforts will occur. Sales of passenger cars were down 23.1 % in Switzerland in the first quarter of 2020, while the year-on-year market decline for commercial vehicles stood at 9.7 %. The willingness of industrial firms to invest, both in Switzerland elsewhere, is likely to fall even further.

GLOBAL ECONOMIC SHOCK The consequences of the coronavirus pan-demic for the export industry can already be seen in various parameters. Global air traffic has declined by 75 % year-on-year in recent weeks, and at Zurich Airport it is down by more than 95 %. In March, the number of take-offs and landings at Swiss airports was 46 % lower than in the same month last year. Container throughput at the largest freight ports was down 10 % year-on-year in February.Road traffic has shrunk by around a third both throughout Switzerland and globally. A number of leading indices on the equity markets lost around a third of their value within a very short space of time. Stefan Ruf, CEO of Euler Hermes Switzer-land: “After a confidence-instilling upward trend in the previous quarter, the Euler Hermes Export Forecast has fallen to a multi-year low.

An unforeseeable event triggered a global economic shock. The question is not whe-ther and when Switzerland and the world will slide into a recession, but how long it will last. Looking back at the last 50 years of economic history, the collapse is un-precedented in terms of its speed, depth and breadth. Given the Swiss economy’s

EULER HERMES EXPORT FORECAST UNDERGOES ABRUPT U-TURN

BUSINESS CLIMATE

The global Business Climate map shows the latest trends in the leading economic indicators by region. Our global climate indicator currently stands at 87.1 points (end of fourth quarter 2019: 96.7 points), which is roughly 13 points below the long-term average of 100 points. The coronavirus pandemic is spreading rapidly across the entire globe. New Zealand, Taiwan and Australia as well as the southern hemisphere in general have got off relatively lightly so far. Europe, by contrast, developed into an epicentre of the pandemic towards the end of the first quarter. The impact on consumption, transport, the service sector and industry has been severe.

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EULER HERMES EXPORT FORECAST

The Euler Hermes Export Forecast indicates the future trend in Swiss goods exports (blue, right-hand scale, in standard deviations), with the zero-point line depicting the long-term, average growth trend in the annual rates of change. The graph also documents the official export statistics (including 12 months rolling, left-hand scale).

–1.31 %

Exports year-on-year: 12 months rolling

Exports in comparison with the previous year

Euler Hermes Export Indicator (right-hand scale)

Zero-point line as long-term trend

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strong international ties, the country will face a particularly tough test. However, Switzerland will also have some opportuni-ties, as its highly developed economy puts it in a strong position to cope with disrup-tions in the value and supply chains better than other countries.”

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Swiss exports enjoyed a good start to the year 2020: in January, they rose by 4.7 % versus the previous month and 7 % year on year. Imports were slightly higher. In Feb-ruary, however, the negative trend that began in September was reaffirmed, with exports dropping by 5 % in comparison with the previous month (–3.3 % in real terms; both figures seasonally adjusted). North American goods trading declined in both directions.According to the Swiss Customs Admini-stration (EZV), the fall in exports in Feb - ruary 2020 was attributable to two heavy-weight product groups in particular: on the one hand, exports of chemical and pharma - ceutical products shrank by 6.7 % due to a drop in demand for medicines, raw materi-als and basic commodities. On the other, watch sales fell by 11.7 % following a strong performance in January. Exports of ma-chinery and electronics increased by 1.2 %, but this rise was due exclusively to sales in the area of electronics (+4.3 %).Exports to the three key sales markets were down, with figures of –8.6 % and –9.1 % re-corded for Europe and North America, respectively. By contrast, exports to Asia

rose by 2.6 %. The negative results in Europe were a result of declines in exports to Germany, France, Ireland and Austria. The increase in Asia is solely attributable to one country: after a big reduction in the previous month, Switzerland delivered 40.2 % more goods (above all chemical and pharmaceutical products) to China. After a strong performance in January, however, exports to Singapore shrank by a third, reaffirming the negative trend seen since September 2019.The fact that the coronavirus pandemic is having a severe impact on the export in-dustry is shown by the most recent surveys of purchasing managers. According to the J.P. Morgan Global Manufacturing PMI, incoming orders from abroad have moved further away from the neutral line of 50 points to a level of just 43.4 points. The ex-port expectations of industry in Germany – our most important trading partner – fell by 18.7 points in March. According to the IFO, this is the sharpest decline since the reunification and the lowest value recorded since May 2009. Export expectations fell in almost all branches of industry, it was reported.

MERCHANDISE EXPORTS (YOY)

1TH QUARTER 2020

1 United Kingdom 17.8 %2 Greece 9.4 %3 Philippines 9.3 %4 Taiwan 8.6 %5 Vietnam 6.8 %6 South Africa 5.8 %7 Indonesia 4.4 %8 Malaysia 4.4 %9 Ireland 4.2 %10 Poland 4.0 %11 Switzerland 3.2 %12 Colombia 3.0 %13 Mexico 1.7 %14 New Zealand 1.6 %15 Netherlands 1.5 %16 India 1.4 %17 Portugal 0.7 %18 Canada 0.4 %19 Denmark 0.2 %20 Bulgaria 0.0 %21 Spain –0.3 %22 South Korea –0.7 %23 Thailand –0.8 %24 Hungary –0.9 %25 United States –1.1 %26 Italy –1.4 %27 Sweden –1.5 %28 Israel –1.9 %29 Argentina –2.5 %30 Peru –2.5 %31 Czech Republic –2.9 %32 Chile –2.9 %33 Singapore –2.9 %34 Brazil –3.0 %35 Advanced Economies –3.6 %36 Japan –4.0 %37 Russian Federation –4.1 %38 Slovakia –4.2 %39 Germany –5.1 %40 Belgium –5.2 %41 Emerging Market –5.2 %42 Malta –5.9 %43 Australia –6.5 %44 Hong Kong –8.3 %45 Norway –10.6 %46 France –10.6 %47 China –14.8 %48 Saudi Arabia –15.4 %49 Belarus –18.5 %50 Finland –19.9 %

The coronavirus pandemic already had a major impact on global trade in February. Over the space of a month, the volume of containers processed at the world’s largest freight ports fell by 10% – the largest monthly decline ever recorded. The biggest falls occurred at Chinese ports (source: RWI/ISL Container Throughput Index).

The table shows the annual rates of change in exports of goods to various countries and country groups on the basis of the currently available official data for the first quarter of 2020 (in US dollars). The data were pre-adjusted for seasonal and working-day factors.

How does the current situation compare to the long-term average? The further the blue line protrudes into the red zone, the worse the situation for the dimension depicted. Consumer sentiment and investor sentiment suffered the biggest falls in a quarter.

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DEVELOPMENT OF THE LATEST EXPORT FIGURES: DECLINE AFTER A POSITIVE JANUARY

TREND: GLOBAL ASSESSMENT

CONTAINER THROUGHPUT

76543210

Original

Adjusted for seasonal

and working-day factors

Euler Hermes Switzerland Richtiplatz 1 8304 Wallisellen T +41 44 283 65 65 info.ch@eulerhermes.com www.eulerhermes.chOffice Lausanne Avenue Gratta-Paille 2 1018 Lausanne T +41 21 643 74 20Office Lugano Via Antonio Adamini 10A 6900 Lugano T +41 91 922 73 64

EULER HERMES SWITZERLAND

Euler Hermes is the global market leader in credit insurance and a recognised specialist in the areas of bonding, guarantees and fidelity insurance, including cyber crime. The company has more than 100 years of experience and offers its business-to-business customers a range of financial services to support them with their liquidity and receivables management.Via its proprietary monitoring system, Euler Hermes follows and analyses the insolvency trends of small, medium-sized and multi-national companies on a daily basis. In total, its expert analyses cover markets that account for 92% of global GDP. Headquartered in Paris, the company is present in 50 countries with more than 5,800 employees. Euler Hermes is a subsidiary of Allianz and has a Standard & Poor’s rating of AA. In 2019, Euler Hermes reported a consolidated turnover of EUR 2.9 billion and insured business transactions worth EUR 950 billion worldwide. Euler Hermes Switzerland employs around 50 staff at its head-quarters in Wallisellen and its other locations in Lausanne and Lugano.

FORWARD-LOOKING STATEMENTS The statements contained herein may include views, statements about future developments and other forward-looking state-ments that are based on the present opinions and assumptions of management and involve known and unknown risks and un-certainties. Actual results, performance or events can differ significantly from those that are explicitly or implicitly included in such forward-looking statements. The following factors could cause such differences (list not exhaustive): (i) changes in the economic conditions and the competitive situation, especially in the Allianz Group’s core business areas and markets, (ii) financial market developments (especially market volatility and liquidity and credit events), (iii) the frequency and severity of insured claims, including as a result of natural disasters, and the devel-opment of claims expenses, (iv) mortality and morbidity rates and trends (v) persistence levels, (vi) the extent of credit defaults, especially in the banking business, (vii) interest rates, (viii) ex-change rates, including the EUR-USD exchange rate, (ix) changes in laws and regulations, including tax regulations, (x) the effects of acquisitions, including associated integration issues, and re-organisation measures, and (xi) general competition factors at a local, regional, national and/or global level. Many of these factors may become more likely or more pronounced as a result of terrorist activities and their consequences.

NO OBLIGATION TO UPDATE

The company is under no obligation to update the information or forward-looking statements herein, with the exception of the information prescribed by law.

Picture credits: Swissport | www.swissport.com

ABOUT THE EULER HERMES EXPORT FORECAST

The Euler Hermes Export Forecast takes into account a large amount of data that is relevant in the context of the Swiss export industry. It factors in leading indicators for industry, transport and the financial and commodity markets as well as new sentiment indicators. Around 100 components are in-corporated into a dynamic, predictive model, in which data series with a stronger lead time are given a higher weighting. The Euler Hermes Export Forecast has a lead time of up to six months in comparison with the actual exports of the Swiss export industry.