World Trade - August 2008 - (Page 25)

greater caution. A decline in housing prices would moreover hinder the mortgage equity withdrawals that currently represent 6 percent of disposable income. In this context, residential construction could well decline particularly for assets intended for rental purposes—where proﬁtability has deteriorated substantially—as well as for the high end affected by the reduction of the bonuses distributed in the ﬁnancial sector of the City. Ofﬁce construction will slow due to the slowdown in services. Ongoing preparations for the 2012 Olympic Games along with the continuing dynamism of school, hospital and road and rail infrastructure construction will only partly offset that trend. Only the performance of goods exports, despite the ﬂagging dynamism of the U.S. market (15 percent of sales) and the decline of the dollar, should improve, thanks to the weakening of the pound sterling against the euro. That will not sufﬁce, however, to reduce a very large trade deﬁcit only partly offset by the recurrent surplus position of the services and investment income balance. In 2007, the Coface payment incident index remained satisfactory, bearing out the decline in bankruptcies. Corporate proﬁtability remained high with proﬁts increasing 10 percent. They could level off in 2008, albeit at a good level, amid a decline in economic activity. Although that will have little effect on large companies in view of their low-debt positions and good cash ﬂow, smaller companies with limited access to the ﬁnancial market and that rely on adjustable-rate loans in consequence will experience difﬁculties to varying degrees. The housing and home furnishings (manufacturing and retailing sector) should suffer from the decline in residential investment, even if that can be partly offset by orders from the public sector or related to preparations for the Olympics. Agriculturalproduct users and processors (breeders, cheese-makers, biscuit-makers, etc) will enjoy varying degrees of latitude to pass on the rising cost of those products in sales prices to their buyers. That may prove difﬁcult when dealing with mass distribution where a context of sluggish consumption will exacerbate competition. Financial sector subcontracting will also present higher risk. South Korea The economy grew at a still respectable 4.8 percent rate in 2007, driven by goods exports and household consumption, itself spurred by an increase in disposable income and a wealth effect caused by rising property and stock market prices. Buoyant foreign demand beneﬁted electronics, the automotive industry and shipbuilding in 2007. The country should prove relatively insensitive to the slowdown in 2008 in the United States, which represents only 15 percent of South Korean exports. In these conditions, the Coface payment experience has generally been good. Large innovative companies continue to post high proﬁts WTM08084Gtnexus1.indd 1 WWW.WORLDTRADEMAG.COM 7/14/08 2:58:06 PM 25 http://www.gtnexus.com http://WWW.WORLDTRADEMAG.COM

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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