Developing countries continue to lead trade growth – report

Developing nations were the key drivers of growth in international trade for 2011, in spite of the volatility caused by the international financial crisis, according to a report launched today at the EBRD’s Trade Finance Forum in London.

The Forum, attended by 250 trade finance professionals from major global market players, took place ahead of the EBRD’s Annual Meeting, on 17 May 2012.

The report “Rethinking Trade and Finance” by the Paris-based International Chamber of Commerce, with contributions from the EBRD and other institutions, notes that despite a year of upheavals, annual trade volume growth for 2011 was 6.6 per cent, slightly above forecasts by the World Trade Organization.

The survey, which provides some of the most important international data on trade finance, suggests the current environment is dampening prospects for 2012, with annual trade growth forecast at 5.2 per cent this year, increasing to 7.2 per cent in 2013.

The report – in which representatives of 229 banks in 100 countries (a sharp increase on last year) took part – reveals that growth is slowing down in major developing countries in the region due to a tightening of domestic policy initiatives introduced between late 2010 and early 2011 to combat high inflation. Still, developing countries continued to lead trade growth in spite of the slowdown towards the end of the year.

The eurozone meanwhile was strongly affected by the financial and economic crises, with the highest annual decrease in export traffic of -5.85 per cent.

Thierry Senechal, ICC Senior Policy Manager, Banking Commission, said, “The ICC Global Survey 2012: Rethinking Trade and Finance will be a useful tool for both policymakers and senior executives in financial institutions worldwide, enabling them to better understand the broad challenges that must be tackled to ensure that trade finance continues to play a vital role in the financing of global trade.”

Rudolf Putz, Head of the EBRD Trade Facilitation Programme (TFP), added, “Many commercial banks in the eurozone are currently very cautious about increasing their exposure to private banks and importers and exporters in eastern Europe and the CIS countries. As a result, there is now increased demand for additional trade finance facilities of IFIs like the EBRD, particularly for trade finance transactions with longer tenors and larger amounts than foreign commercial banks can provide.”

The TFP, launched in 1999, can guarantee any genuine trade transaction to, from and within the EBRD countries of operations. The Programme’s participants currently include 101 issuing banks in 21 countries of operations with limits exceeding €2 billion in total, as well as more than 800 confirming banks throughout the world.

Since 1999 the TFP has facilitated more than 12,000 cross-border trade transactions for a total of €7 billion.

In 2011 the TFP supported a record 1,616 transactions for a total of €1.03 billion. The Programme was particularly active in the early transition countries, which accounted for 60 per cent of all recorded transactions in 2011. Banks in these countries will remain the key beneficiaries of the Programme.