Swiss Watch Exports Barely Grow in May as Middle East Conflict Takes Toll

The Federation of the Swiss Watch Industry reported Thursday that total shipments rose to a value 0.4% higher than a year earlier, driven by stronger demand for bimetallic models. Meanwhile, exports of precious metal and steel watches fell.

In the first five months of 2024, overall exports are down 3.1% compared to the same period last year. The industry has been grappling with the fallout from the US-Israeli conflict with Iran, which has disrupted air travel to the Middle East and dampened consumer sentiment.

Last year, the Gulf region was a key growth driver for Swiss watchmakers including Rolex and Swatch Group AG, with exports totaling about 2.6 billion Swiss francs ($3.3 billion). The United Arab Emirates alone accounted for over half of that amount. In May, however, shipments to the UAE dropped by 13.5%.

Bright spots in May included the US and UK, where exports rose 12.3% and 24.9% respectively. Exports to China declined 21.4%, continuing a trend of weak demand in the Asian market.

Profitability remains under pressure due to soaring precious metal costs and foreign-exchange headwinds. Gold prices have more than doubled in the past three years, fueled by increased central bank buying, which is squeezing margins for watchmakers.