A recent survey by the International Chamber of Commerce and the International Monetary Fund has found that financial institutions generally anticipate weak demand for trade finance products in 2012.

Aspects of the survey reveal bankers anticipating more difficult trading conditions than they did during 2008-09 credit crunch, while in some regions the outlook is somewhat brighter.

Regional variations

Demand is expected to be weakest in Europe but Asia's appetite for trade finance products appears to be growing.

The survey of 337 financial institutions found that 60 per cent of respondents anticipated demand for trade finance in Asia to strengthen in 2012 while close to 50 per cent of respondents predicted a further deterioration for the Euro area.

The main factors behind the negative outlook for 2012 were financial constraints that reduce the availability of trade finance. This was particularly acute amongst large banks and those with business in developing countries.

Around 90 per cent of respondents indicated that less credit or liquidity available at counterparty banks would affect their trade finance activities to a greater or lesser extent.

See the full report of the ICC-IMF Market Snapshot January 2012

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.