CM October 2023

International Trade
Monthly round-up of the latest stories
in global trade by Andrea Kirkby.
Ferrari proves ‘ultra-luxury’
can be bullet proof
FERRARI has increased its
forecasts for the year ahead as
it has benefitted from cash-rich
consumers’ ambivalence to
challenging economic conditions.
CityAM wrote that the company
reported revenues of €1.47bn, up 14.1
percent year-on-year and for the year
ahead, and is anticipating modest
additional growth of around €2.2bn, as
opposed to its last forecast of between
€2.13bn and €2.18bn.
Ferrari’s results are just the latest of a
number of luxury carmakers who have
been cashing in on demand for luxury
vehicles and supercars, with the likes of
Porsche and Bentley also benefitting from
wealthy consumers’ spending during the
cost-of-living crisis.
MoneyWeek also commented on the
subject. It wrote about the value of the
luxury goods market – beauty products,
watches, jewellery and shoes – which
has almost tripled from €122bn to €354bn
since 2002. One reason for this has
been “the consistent growth in both
the number and level of wealth of the
world’s wealthiest people.” The number
of millionaires is expected to reach 87m
by 2026.
The point of this particular story is that
if you want to protect revenue streams a
good way to do it is to kick your product
lines into the realms of the luxury
market. Customers there are invariably
too rich to feel the need to cut back.
NEW HIGH-SPEED ELECTRIC
RAILWAY IN TURKEY
UK Export Finance (UKEF) has
announced that it has underwritten
€781m of financing – around £680m
– to support construction of a 286km
high-speed electrified railway across
southern Turkey.
With financing provided through
UKEF’s Buyer Credit Facility, Rönesans
Holding will finish construction of
the Mersin-Adana-Gaziantep High
Speed Railway on behalf of the Turkish
Ministry of Transport.
The financing should, it is hoped,
create multimillion-pound export
contract opportunities for UK’s firms
involved in infrastructure, engineering
and project management.
But beyond the direct financial
impact of the deal, there exists the
likelihood that the new line which is
able to carry trains travelling up to
200kmh, will aid infrastructure and
growth in the region. It should also
reduce the travel time from Gaziantep
to Mersin by four hours; Mersin is the
second largest container port in the
country.
It should be noted that Gaziantep
was near the epicentre of the 7.8
magnitude earthquake which struck
Turkey in February 2023. There
might be opportunities to help with
reconstruction.
THE US just cannot help itself – it
cannot stop spending. However, such
largesse can be of use to overseas firms.
The latest round follows on from a
new climate-focused industrial policy
law, the Inflation Reduction Act, and
overseas firms could become some of
the biggest beneficiaries.
The Wall Street Journal reckons
that this new spending isn’t a sign
A new round of cash for the US
of economic weakness, but rather an
indication that key foreign firms see the
US market as an ‘opportunity too large
to pass up, even if that means building
factories abroad and risks training up
Americans to be competitors.’
The new legislation provides
Government support to those willing to
invest. According to ukandeu.ac.uk, ‘the
Act aims to spur investment in green
technology in the United States by
devoting $369bn in subsidies through
grants, loans and tax credits to public
and private entities.’
Beyond the hard cash, it also
suggests that there are market
opportunities in serving the climate
protection sector.
So, if you want handouts to
manufacture you know where to go.
Brave | Curious | Resilient / www.cicm.com / October 2023 / PAGE 32