Trade Finance Market: Post Covid Updates And Forecast With Up-to-date Analysis Regarding Current Market Scenario
Accounting to over 3% (over 3 Trillion) of the Global Trade, the sectors providing Trade Finance had faced a severe blow in the current financial year. However, in the wake of the current pandemic, the trade finance market presents a positive image. Expected to grow by USD 11.25 billion during 2020-2024, the current CAGR of the industry is around 4%.
Considering the factors into play, the latest trends and drivers of the bigger segments represent a fragmentation. The current situation of a fragmented market is bound to accelerate in the current time frame with some of the key players that influence the industry are Banco Santander SA, Bank of America Corp., BNP Paribas SA, Citigroup Inc., Crédit Agricole Group, Goldman Sachs Group Inc., HSBC Holdings Plc, JPMorgan Chase & Co.
The current situation by the key players presents the risks of adapting to the situation. The lockdown has caused a disruption in the world economies and led most of the lenders to ax down new approvals. With pause on their new approvals, the lenders are re-evaluating the situation.
On the other side, the debt investors who support the trade finance lenders are changing their tools of play to move towards safer assets, given the high volatility in equity markets. With the major players running behind maximizing the opportunities, the smaller section of the market vendors should focus more on the growth prospects in these fast-growing segments led by the impact of Covid.
Segmentation by Regions
Looking at the segmentation of the trade finance market on a global scale, APAC had the largest trade finance market share during its tenure in 2019. The regions are further expected to offer several growth opportunities to market vendors and strengthen trade finance with governments help to increase exports.
The expected forecasts suggest that 56% of the market’s growth will originate from APAC during the forecast period. Moreover, with China as a major player, APAC Market growth in this region is expected to be faster than markets in other regions.
Impact on Exports
The current stats over the exports around the world present decreased export volumes by 80%, by the end of March 2020. The lockdowns happening around the globe have stopped the workers from reaching their work stations. In turn, impacting productions and adding up on the last mile logistical challenges. However, as a response to fight with the trade hit at several levels, Multilateral development banks (MDBs) have launched immediate responses and financial support amounting to more than $200 billion for emerging and low-income countries.