According to the latest Trade Finance Gaps, Growth, and Jobs Survey, announced by the Asian Development Bank (ADB) today on Oct. 14, 2021, global trade finance witnessed a record-breaking gap of $1.7 trillion in 2020, a 15% increase from two years earlier. All thanks to the sudden outbreak of Covid-19 through trade & supply chains that brought economic & financial chaos to the global traders and disrupted international trade & transactions. Read the ICC guidelines to address Covid-19 disruptions in the trade finance market.
As per the survey, the small and medium-sized enterprises (SEMs) were tremendously affected during the pandemic as trade finance evaporated with the spread of the Covid-19 disease, accounting for almost 40% of dismissed trade finance requests. Particularly, SMEs owned by women found it difficult to get funding, with 70% of their applications completely or partially rejected. The gap which is showing the difference between requests and approvals for funding to aid imports and exports was $1.5 trillion in 2018.
According to ADB Trade and Supply Chain Finance Head Steven Beck, “Trade plays a crucial role in recovering the global economy from the pandemic, but the funding shortfall makes it complex to generate employment and development. The difficulties of trading businesses might be even more outrageous than our survey reports, as many of them were discouraged by the economic vulnerability from even applying for trade finance services. The increased prices of food and energy will worsen the gap situation, eating into nation and counterparty funding limits in place to help trade.”
Read more: https://www.emeriobanque.com/news/global-trade-finance-gap-enlarged-to-1-7-trillion-in-2020
