World Trade - August 2008 - (Page 20)

COVER STORY hamper, nonetheless, strong export growth. Companies A slowdown is expected in 2008 with a smaller positive will have difﬁculty remaining price competitive with the contribution from foreign trade not offset by the recovery rising prices of energy and certain raw materials squeez- of private consumption. The growth of exports will be ing their margins. In this context, they will remain vigilant slower due to the still unfavorable exchange-rate effect on on investment policy and hiring. Despite the shortage of price-competitiveness and to the economic slowdowns in skilled labor, wages should thus register only moderate Europe and the United States. Import growth will remain increases; which will limit the growth of consumption strong meanwhile reflecting the revival of household (56 percent of GDP). Problems demand, buoyed by the continulinked to property investment ing decline of unemployment and Some countries will only be reabsorbed graduthe concomitant decline in the ally. Households will cut back on unemployment-insurance contriare clearly at risk spending as they contend with bution rate as well as by increases surging prices for energy and in civil service wages, pensions of catching the food products. Despite upward and aid for the education of pressure on imported goods, correction contagion children. The revival of private consumer prices should only consumption will nonetheless be currently sweeping increase slightly with the risk of modest due to the unfavorable deﬂation continuing to overhang effect of the rising cost of credit as across the United the Japanese economy. The well as of energy and food. Faced ﬁscal deﬁcit and public debt will with weaker foreign demand, States. remain at record levels with tax industry will slow the pace of its revenues likely to be ﬂat amid the investments. economic slowdown. Measures essential to improvement Corporate payment behavior has remained good as in public sector ﬁnances, including increases in VAT on evidenced by the excellent level of the Coface payment consumption will likely be postponed again pending the incident index for Germany and the 8 percent decline next parliamentary elections in 2009. in bankruptcies in the ﬁrst nine months of 2007. The Japanese companies are generally in good finan- reduction of corporate income tax this year in a context cial health with a high rate of proﬁt (about 11 percent of balanced public ﬁnances will have a positive inﬂuence of GDP), high cash ﬂow, and recourse to borrowing in on that trend. The residential construction sector will steady decline as they continue to reduce nonetheless, remain mired in difﬁculty, however, particularly in the still high debt (95 percent of GDP). Reﬂecting that favor- eastern regions. The kitchen furniture sector also presable situation, the Coface payment incident index has ents a high-risk proﬁle at this juncture. The automotive been below the world average. Companies should thus, subcontracting sector, meanwhile, has suffered from the not suffer from a credit crunch. These statistical data, increasing pace of relocations to the eastern part of the particularly applicable to large manufacturing compa- continent. nies, tend to mask the reality faced by smaller companies, which have been experiencing increasing difﬁculties par- UK ticularly when located outside major metropolitan areas Despite a slowdown in the and operating exclusively in the domestic market. Bank- fourth quarter, economic ruptcies, after declining the past four years have begun to growth remained strong in increase again. Operators in a range of sectors will thus 2007. Households increased bear particularly close watching: construction, property, their spending encouraged by strong job creation notably wholesaling, hotel-catering and consumer electronics. in services (three-quarters of GDP) and construction. Germany Public spending remained dynamic with much ground Exports and productive investto make up as regards public health, education and inframent were the main economic structure, which has contributed to a continuing large engines again in 2007, with public sector deﬁcit. exports holding up well in the The British economy will be markedly less dynamic this face of the euro appreciation year due mainly to sharp slowdown of both household conagainst the dollar. They comsumption and investment. Households will be faced with prise mostly capital goods, high-end cars and chemi- a slower pace of job creation in the public and ﬁnancial cal and pharmaceutical products relatively insensitive spheres, which will not, however, result in increased unemto price variations. Moreover, 60 percent go to the EU ployment, due to easing immigration. The slow growth of with a good proportion of the balance representing sales disposable income, attributable to persistent inﬂationary to emerging countries in Asia and Central and Eastern pressures and substantial wage moderation in both the Europe where demand has remained strong. Expiry of public and private sectors, will be more difﬁcult to offset advantageous amortization rules late last year spurred through borrowing. Despite a reduction in the Bank of productive investment. Household consumption and England’s key rate, credit will become both more expensive residential construction suffered conversely from the and less available with ﬁnancial institutions, aware of the increase in VAT. sharp increase in personal bankruptcies in 2007, exercising 20 WORLD TRADE AUGUST 2008

Table of Contents Feed for the Digital Edition of World Trade - August 2008

World Trade - August 2008 Contents Weathering the Storm Helping the World’s Poorest Nations Benefit from Global Trade Supply Chain Watch Tradewinds World Trade’s Top U.S. Trading Partners LTL Shipping ‘On the Fly’ Air Cargo Flies a New Heading Getting More from China Sourcing Why 3PLs Need a Seat at the C-TPAT Table Performance-based Supply Chains Drive Total Lifecycle Value SmartWay Navigates Sustainable Transportation Around the World in 80 Days—Hours—Minutes

World Trade - August 2008

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