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Data for today’s episode is provided by Mercator Advisory Group’s report – Financing Commercial Trade: The Search for Liquidity.
How Will World Trade Export Be Affected by COVID-19?
- Despite COVID-19, total world trade export is expected to remain above $20 trillion.
- 80% of the expected $20 trillion in world trade export will require some form of financing.
- $20 trillion in world export trade is roughly equal to 2010 & 2011 levels of world export.
- The major driver for international trade finance is the export/import of merchandise and services between foreign trading partners.
- The growth (or retraction) of world export trade roughly tracks the rise/fall of global GDP.
- One could argue that getting industries back into strong growth mode will require even broader access to liquidity through trade finance.
Mercator Advisory Group’s latest research report, Financing Commercial Trade: The Search for Liquidity, provides a direct view into the latest trends in technology and tools in the trade finance space. Traditional trade finance remains a primary method for managing risk and creating liquidity, especially for international commercial merchandise exports and imports. There are now more methods than ever before to access liquidity and promote both domestic and international flows of goods and services.
“One of the interesting things we discovered during discussions with industry participants has been a marked uptick in the recognition of working capital management effectiveness, particularly as the coronavirus sledgehammer policies hit businesses,” commented Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service, author of the report, “so expectations for the adoption of these and other digital solutions have greatly increased.”