Switzerland's trade surplus narrowed to its lowest level since the Swiss franc's surge rocked the country more than two years ago, as its industrial sector continued to struggle with the strong currency and pharmaceuticals exports slowed. The merchandise trade surplus fell to 1.97 billion Swiss francs ($2.03 billion) in April, customs data showed on Tuesday, the lowest since December 2014. In January 2015 the Swiss National Bank scrapped its long-standing limit on the franc versus the euro, sending the currency soaring and making Swiss exports more expensive.

"Switzerland is still recovering from the currency shock and it hasn't completely recovered yet," said Alexander Koch, head of macroeconomics at Bank Raiffeisen in Zurich. Although Switzerland's export-led economy did not go into a recession following "Frankenshock", the effects have weighed on growth, which Koch said he expected to hold steady at 1.3 percent in 2017 before increasing to 1.5 percent in 2018. The SNB has used negative interest rates and currency intervention to try to rein in the franc, which it calls significantly overvalued.

Swiss industry has borne the brunt of problems linked to the highly valued currency. Industrial production fell 1.3 percent in the first quarter, while new orders fell 4.6 percent, Federal Statistics Office data showed. Nearly half of Swiss industrial companies may relocate operations abroad within the next three years and almost a quarter made an operating loss last year, the Swissmem mechanical and engineering lobby said this year.

Copyright Reuters, 2017