The emblematic Swiss industry "is navigating one of the most complex periods in recent memory", the professional services giant said in the 11th Deloitte Swiss Watch Industry Study.
Watchmaking, the wealthy Alpine country's third-largest export sector, was rocked when the United States -- its largest market -- imposed 39-percent tariffs on Swiss products in August.
Furthermore, exports to mainland China -- the other major market for Swiss watch manufacturers -- continue to decline, with demand hit by youth unemployment and turbulence in the real estate market.
According to figures from the Federation of the Swiss Watch Industry (FH), exports to the United States last year amounted to 4.4 billion Swiss francs ($5.5 billion) -- up five percent on 2023.
Exports to mainland China were at two billion francs -- down 26 percent.
Karine Szegedi, Deloitte Switzerland's consumer, luxury and fashion chief, said the industry should seize opportunities in other countries where growth is booming.
"Tapping into new growth regions is crucial as a way of cushioning declines in established markets," she said.
"Countries like India and Mexico are a source of young, dynamic customers. These customers are open to innovations, giving the Swiss watch industry the opportunity to expand its global presence in the long term."
- New watch markets -
Deloitte had already identified India as a market with high potential for watchmakers in its 2023 study.
Since then, Switzerland has signed a free-trade agreement (FTA) with India, which came into force on October 1, expected to facilitate the Swiss watchmaking industry's access to India's growing middle class.
This year's study noted the "strong domestic demand, rising affluence, and active investment in retail infrastructure" in India.
The study also shone a light on Mexico -- a country Switzerland signed an FTA with in 2021.
Since then, watch exports to Mexico have increased fivefold, with the country establishing itself as the leading market in Latin America.
Deloitte said watch enthusiasm in Mexico was being driven by social media.
India, however, remains the industry's fastest-growing major market.
FH figures showed Swiss watch exports to India were up 25 percent last year at 274 million francs, while exports to Mexico were up 16 percent last year at 337 million francs.
But while growth in these countries offers promising prospects, rising sales will not be enough to entirely offset the impact of US tariffs and the slump in exports to China, Deloitte said.
Mexico was the Swiss watch industry's 15th-biggest market last year, and India the 21st.
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