The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Blocked trade: Banks suffer from the decline in global flows

It was the weakest year for global trade since the financial crisis. Trade-finance margins and volumes fell in 2015, while bank competition and industry costs jumped. Euromoney surveys the fallout.

Blocked trade marble track-350

A wave of dollar-denominated corporate debt defaults; Middle Eastern conflicts that triggered a surge in political-risk premia; and weak productivity gains that reduced wages, capex and corporate profits. Some suggest these were the economic shocks that shook emerging markets last year. In fact, none of these factors adequately explain why 2015 was the year the investment case for emerging markets unravelled. Simply put, last year was the weakest for global trade since the financial crisis. Weaker exports from emerging markets lay at the heart of their economic fragility last year. It drove foreign investor flight, the deterioration in balance-of-payments positions and the corresponding lack of fiscal and monetary firepower to service foreign debt.

Underscoring the fragility of the recovery, global trade contracted in the first six months of 2015, bucking the decades-long trend of trade expansion outpacing GDP growth. Trade volumes staged a modest recovery later in the year, according to the World Trade Monitor, which forecasts that trade grew 2.8% last year compared with an expected global GDP growth of 3.1%. 

These volumes have triggered fears over a structural breakdown in globalization that could hamper trade for years to come. 

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree