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Global Trade Finance Gap Reaches Record $2.5tn Amid Economic and Geopolitical Volatility

The global trade finance gap has reached an unprecedented $2.5 trillion in 2022, according to the 2023 Trade Finance Gaps, Growth and Jobs Survey by the Asian Development Bank (ADB). This represents the difference between the requested financing for imports and exports and the approved amount. Despite a strong recovery from the COVID-19 pandemic, with global goods exports increasing by 26.6% in 2021 and 11.5% in 2022, the economic challenges have made it more difficult to secure financing. Data suggests a stagnation in the last quarter of 2022, followed by a decline in global trade exports of about 3% as of April 2023.

The survey, which drew from data from 137 banks and 185 firms across 50 countries, is considered the leading indicator of the health of trade finance globally. Respondents cited rising interest rates, financial market uncertainties, the global economic slowdown, and geopolitical tensions as contributing factors to the trade finance gap.

Suzanne Gaboury, ADB’s Director General for Private Sector Operations, commented on the growing gap, stating that it is hindering the potential of trade to drive economic and human progress, especially as the world recovers from the pandemic.

The survey also explored environmental, social, and governance (ESG) issues and the role of digitalization in supply chains and the trade finance gap. The majority of participants believed that aligning with ESG principles could help narrow the trade finance gap.

Firms participating in the survey unanimously identified the lack of adequate financing as the primary hurdle in supply chains. They emphasized the importance of reliable financing, efficient logistics, and the adoption of digital technology in order to strengthen supply chain resilience.

To promote trade and enhance imports and exports, the Trade and Supply Chain Finance Program (TSCFP) by ADB collaborates with more than 200 partner banks. Since its establishment in 2009, the TSCFP has facilitated $57 billion in trade through 45,510 transactions in markets that are typically challenging for the private sector.

ADB, founded in 1966, is committed to fostering a prosperous, inclusive, and sustainable Asia-Pacific region. With 68 member countries, including 49 from the region, ADB continues to work towards eliminating extreme poverty.

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