A year is a long time in trade finance, and at the beginning of 2020 we were reflecting on geopolitical uncertainty and how volatility had increased demand for trade finance services and what was driving the move trade’s ongoing digitalisation. flow reviews trade’s pandemic recovery and reports on Deutsche Bank’s performance in the Euromoney 2021 Trade Finance Survey

And then Covid-19 hit. Just in time supply chains became ‘just in case’ as networks became disrupted, inventory levels ran down, and businesses recognised the importance long-term relationships rather than purely transactional ones to get the job done.

On 27 November 2020, Daniel Schmand, Deutsche Bank’s Global Head of Trade Finance and Lending told Reuters that he saw global trade finance volumes rebounding more than 7% in 2021 and that “trade finance would be one of the winners in a post-Covid-19 environment”.

Figure 1: World Merchandise Trade Volume 2000−2021

Source: WTO (October 2020). Note that 2020 and 2021 are projections

His remarks followed the World Trade Organization’s October 2020 forecast that the total merchandise trade contraction for that year would be around 9.2% (see Figure 1).

The WTO also made the point that “While the trade decline during the COVID-19 pandemic is similar in magnitude to the global financial crisis of 2008-09, the economic context is very different” with Deputy Director General Yi Xiaozhun observing how trade has played a critical role in responding to the pandemic, “allowing countries to secure access to vital food and medical supplies”. He added, “Trade has also facilitated new ways of working during the crisis through the provision of traded IT products and services.” Yi's concerns about a “descent into protectionism”, came before the results of the US Election, and President Biden’s indications of a more collaborative approach to trade than that of his predecessor.

The vaccine roll-out and a strong closing quarter to 2020 are all indicators that 2021 will be a busy one for trade finance. The WTO’s signalling of a “goods rebound” despite the caveat that it may be “short-lived” is nevertheless positive.

Asia’s economic recovery from Covid-19 has been something of a bright spot, albeit with a risk of inflation, noted Deutsche Bank economists Juliana Lee and Michael Spencer in their Asia Economic Notes (23 February 2021).

“Asia will see a broad-based, synchronised, and significant rise in GDP growth and inflation in the coming months. This reflects large 'base effects' in activity and prices. The dynamics of disinflation of last year suggest that its reversal this year will be led by oil prices. But against that base case, upside risks to inflation include rising commodity prices, logistics constraints, and supply chain reconfiguration,” they explain.

With a total of 16 No.1 (up from 15 in 2020) positions Deutsche Bank has underlined how its trade finance and lending has been part of the Covid-19 recovery solution, with promotions from No.2 market leader to No.1 in China and South Korea reflecting increased activity in those regions.

“Today’s results release of the Euromoney Trade Finance Survey 2021 is a very impressive testimony of our Global Hausbank approach with Deutsche Bank having won 16 No.1 positions including eight Market Leader awards across Europe, Asia and the Americas,” says Daniel Schmand.

Best Trade Finance Provider: by region
Western Europe: No.1 (4th time running)

Best Trade Finance Provider: by country
Germany: No.1 (9th time running)

Spain: No.1 (6th time running)

Netherlands: No.1 (last won in 2016)

Malaysia: No.1 (7th time running)

Thailand: No.1 (5th time running)

South Korea (first time)

United States of America (first time)

Best Service Provider
No.1 Best Service Provider All Services: China

No.1 Best Service Provider All Services: Hong Kong SAR

No.1 Best Service Provider All Services: Malaysia

No.1 Best Service Provider All Services: Philippines

No.1 Best Service Provider All Services: South Korea

No.1 Best Service Provider All Services: Netherlands

No.1 Best Service Provider All Services: Spain

No.1 Best Service Provider All Services: Thailand

No.1 Best Service Provider All Services: United States of America

The full results of the Euromoney Trade Finance Survey 2021 can be found here.