Executive Briefings

Global Trade Recovery Takes Uneven Course, Survey Finds

Global trade flows rebounded across many regions in 2010, according to the International Chamber of Commerce (ICC) Trade and Finance Global Survey 2011, but high-pricing meant that traders in many low-income countries still faced difficulties accessing affordable trade finance.

Representatives from 210 banks in 94 countries responded to the 2011 Global Survey, which asked for their opinion, as well as statistics, on the current trade finance landscape in their respective countries. This survey, the fourth consecutive ICC poll of its kind, registered 30 percent more responses than in the previous year, in terms of the number of banks.

Recovery worldwide has been driven by increased trade in North America, Europe and Asia, as well as between Asia and the rest of the world, according to the survey. Other regions, especially Africa, continued to have stressed markets, and the cost of trade finance also remained high in many parts of Asia and Latin America.

Traders in many low-income countries still have considerable difficulty accessing trade finance at an affordable cost, particularly for import finance. One positive development is that the average price for letters of credit in large emerging economies fell from 150 to 250 basis points in 2009 to 70 to 150 basis points in 2010.

"What is needed now is a more targeted use of resources, focusing on the poorer countries and small and medium-sized enterprises around the world," said Pascal Lamy, Director-General of the World Trade Organization (WTO). "They should not be paying the high price for the repair and re-regulation of the global finance industry."

Most respondents, however, agreed in the survey - which was commissioned by the WTO Expert Group on Trade Finance to track the developments in the industry - that business on the whole has been significantly improving since the final quarter of 2009. Markets in several advanced economies are quickly returning to normal trading conditions, in terms of liquidity and the availability of trade finance. The acceptance of risk and pricing has also become more favourable.

Source: International Chamber of Commerce

Global trade flows rebounded across many regions in 2010, according to the International Chamber of Commerce (ICC) Trade and Finance Global Survey 2011, but high-pricing meant that traders in many low-income countries still faced difficulties accessing affordable trade finance.

Representatives from 210 banks in 94 countries responded to the 2011 Global Survey, which asked for their opinion, as well as statistics, on the current trade finance landscape in their respective countries. This survey, the fourth consecutive ICC poll of its kind, registered 30 percent more responses than in the previous year, in terms of the number of banks.

Recovery worldwide has been driven by increased trade in North America, Europe and Asia, as well as between Asia and the rest of the world, according to the survey. Other regions, especially Africa, continued to have stressed markets, and the cost of trade finance also remained high in many parts of Asia and Latin America.

Traders in many low-income countries still have considerable difficulty accessing trade finance at an affordable cost, particularly for import finance. One positive development is that the average price for letters of credit in large emerging economies fell from 150 to 250 basis points in 2009 to 70 to 150 basis points in 2010.

"What is needed now is a more targeted use of resources, focusing on the poorer countries and small and medium-sized enterprises around the world," said Pascal Lamy, Director-General of the World Trade Organization (WTO). "They should not be paying the high price for the repair and re-regulation of the global finance industry."

Most respondents, however, agreed in the survey - which was commissioned by the WTO Expert Group on Trade Finance to track the developments in the industry - that business on the whole has been significantly improving since the final quarter of 2009. Markets in several advanced economies are quickly returning to normal trading conditions, in terms of liquidity and the availability of trade finance. The acceptance of risk and pricing has also become more favourable.

Source: International Chamber of Commerce