2021 Trade Finance Gaps, Growth, and Jobs Survey

Abstract

In 2020, the coronavirus disease (COVID-19) pandemic devastated the global economy, causing global gross domestic product to shrink by 3.2% and global trade to contract by 7.5%. As governments around the world tried to contain the spread of the virus by imposing mobility restrictions, sharp declines in economic and trade activities jeopardized markets. Trade finance is vulnerable to economic crises despite being a low-risk asset class, and yet it is vital to support trade-led growth, which is critical to growing economies ravaged by the pandemic. In economies where trade finance gaps were already high prior to the pandemic, the panic and uncertainty induced by the rapid global spread of COVID-19 aggravated the trade finance access issue. The 2021 Asian Development Bank (ADB) Trade Finance Gaps, Growth, and Jobs Survey aims to enhance our understanding of the size of the trade finance shortfall and the related pandemic impact. Now on its seventh cycle, the survey continues to find large market gaps for trade finance that impede the full potential of trade to deliver growth, jobs, and poverty reduction. Against the backdrop of the COVID-19 pandemic, the survey discusses the following: • Trade finance market gaps in 2020; • Impact of the pandemic on the supply and demand in trade finance markets; • Prospects of post-COVID-19 recovery and major barriers to the path to recovery; • Access to SME trade financing and support measures for SMEs during the pandemic; • Use, role, and potential of fintech and digital solutions, and obstacles to their growth; and • Policy implications including the role of digitalization in trade and trade finance and international cooperation in promoting trade finance.