Manila [Philippines], September 6 : The global trade finance gap grew to a record USD 2.5 trillion in 2022 from USD 1.7 trillion two years earlier, as rising interest rates, poor economic prospects, inflation, and geopolitical issues reduced the banks' financing capacity, according to a report by the Asian Development Bank (ADB).
Simply put, the trade finance gap is the difference between requests and approvals for financing to support imports and exports.
The regional development bank in its ‘2023 Trade Finance Gaps, Growth and Jobs Survey’ released on Tuesday stated heightened economic risks made finance more difficult to secure than before.
The ADB survey includes data from 137 banks and 185 companies from around 50 countries.
Respondents who participated in the ADB survey said they faced continued constraints in 2022 due to rising interest rates and financial market uncertainties.
Around 60 per cent of responding banks reported that the Russian invasion of Ukraine impacted their trade finance portfolios due to growing geopolitical uncertainty and increased commodity prices.
“The global trade finance funding gap has now widened to well over USD 2 trillion, as the global economy still struggles to rebound from the pandemic,” said ADB’s Director General for Private Sector Operations Suzanne Gaboury.
“That growing gap strangles the potential of trade to deliver critical human and economic development through jobs and growth,” said Gaboury.
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