Trade finance brightens in Brazil

Trade finance brightens in Brazil

Loans Structured Finance Brazil

Brazil's trade finance market will likely grow 5% next year as an economic recovery boosts imports enough to offset sluggish exports, LatinFinance has heard.

"We expect Brazil's economy to gain traction in 2019. The [truckers'] strike and election-related uncertainties will give way to a recovery in imports," leading to increased demand for trade finance loans, said Bill Adams, vice president and senior economist for the US financial services group PNC.

As Brazil's economy improves, and as banks benefit from proposed tax cuts, the spreads on trade finance loans could come down next year, he said.

Brazilian export volumes will likely grow between 3% and 6% in 2019, due to sustained demand for oil, iron ore and soy beans, but export earnings will post lower growth on falling energy prices, Adams said.

For a banker in New York, the economic recovery will lead to a rise in trade finance loans in Brazil. "The market has been waiting to reposition in Brazil," he said.