Trade finance downturn reduces flow of critical goods into and out of poor countries as banks cut back on credit. A drop in trade finance poses a threat to such companies, denying them vital lines of credit. The curozone crisis poses a greater threat to developing economies than the 2008 financial crisis and is already having a negative impact on trade finance and remittances, according to the World Bank.
The drop in trade finance and remittances, according to the World Bank.
The drop in trade finance has resulted i a reduction in the flow of critical goods into and out of emerging markets amid warnings that gaps in the agriculture and energy sectors in particular would hurt poor countries. Total global trade finance volume fell to USD 26.8 billion in the first quarter of this year, down 18 percent year-on-year to become the lowest quarterly volume since the third quarter of 2009 (USD 24.4 billion). European banks, which provide almost 80% of commodity trade finance, are likely to sell off as much as $3.8tn in assets over the next few years, according to the International Monetary Fund.
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