APEC: Trade finance market conditions set to “ease”

Problems with the trade finance markets should ease over the next six months, according to a survey carried out among Asian economies.

According to a report conducted by the Asia-Pacific Economic Cooperation (APEC) 10 out of 18 economies surveyed expected the situation with access to trade finance to improve, although there will be some “continued uncertainty in credit conditions”.

The results of the survey were presented during a meeting of APEC’s senior officials, held on Friday, July 17.

Further findings of the survey revealed that 16 out of 18 economies reported that they still faced some problems with trade finance. The most common reason for the tightness in trade financing was the increased risk aversion of financial institutions towards companies, higher perceived counterparty risks, and general liquidity shortages in the economy.

Out of these 16 economies, 13 reported that risk aversion of financial institutions towards companies had increased since the onset of the global economic crisis late last year.
In contrast, only two economies felt that the trade finance problem was exacerbated by higher capital costs or increased capital requirements of banks.

The survey also found that APEC economies had some schemes in place to tackle the lack of trade finance. A total of 17 of the 18 surveyed economies have existing trade finance programmes, and many had implemented new programmes or enhanced existing schemes.

APEC is an intergovernmental group that operates on the basis of non-binding commitments. In contrast to organisations such as the WTO, APEC has no treaty obligations placed on participants. It reaches decisions based on consensus and commitments are undertaken on a voluntary basis.