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A TRADE finance poll conducted by Singapore, which chairs this year's APEC meetings, has found that 10 out of 18 APEC economies surveyed expect the trade financing situation to ease over the next six months.

"Nevertheless, the situation still bears watching given continued uncertainty in credit conditions," said the authors of the survey. The results were presented at the APEC SOM-SFOM Symposium held in Singapore on July 17.

The survey revealed that 16 out of 18 economies surveyed faced some problems in trade financing. The most commonly cited reasons for tightness in trade financing were increased risk aversion of financial institutions towards companies, higher perceived counter party risks, and general liquidity shortage in the economy.

Among the 16 economies that faced trade-financing problems in their economies, 13 noted that risk averse financial institutions had increased since the onset of the global economic crisis late last year. In contrast, only two economies felt that the trade financing problem was precipitated by higher capital costs or increased capital requirements of banks, a statement issued on behalf of APEC members said.

The survey also showed that APEC economies had the general mechanisms to tackle the trade finance challenge. Seventeen of the 18 surveyed APEC economies already had existing programmes to support trade finance in their economies. In response to the crisis, 15 of the 18 surveyed economies had implemented new programmes, or enhanced existing schemes, to support trade finance in their economies. In particular, half of these 18 economies implemented new or enhanced export credit insurance schemes.

Source: http://www.schednet.com