By Oliver O'Connell
Trade finance: Troubled waters
The eurozone crisis and a tightening regulatory screw have intensified a mismatch between emerging trade flows and the provision of trade finance. Latin American companies and
European banks have a long history in Latin America, closely
related to international trade. The 2008/09 global financial
crisis placed many of them in a strong position as US banks
backed off from trade finance lending.
But the eurozone crisis of 2011 triggered a reversal of
fortunes, with a large-scale retrenchment of trade finance
lending by European banks, which had been an essential part of
the market. Gaps emerged - and were often exacerbated - in the
provision of trade finance both direct to corporate clients and
to financial institutions.
Today, a renewed European recession, a lackluster recovery
in the US, and a slowdown in China, have compelled Latin
American companies and their national governments to explore
developing new trade and investment flows.
In 2011, Latin America's exports grew 5.3% and imports 10.4%
- well above the world average - but with global growth slowing
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