In their April/May edition, Trade Finance explores the developments in Middle Eastern trade finance in a special feature on commodities. In the three page spread, we learn from the International Chamber of Commerce (ICC) Banking Commission’s Vincent O’Brien, chair of the Education and Market Intelligence Group, that a perceived increase in risk in the Middle East is causing trade finance in the region to grow – a result of the higher demand for core trade finance products such as letters of credit and guarantees. Supporting his statement are the findings of a recent survey conducted by ICC, which reveal that while global trade on the whole has slowed, trade finance has indeed grown.
However, Anand Pande, Product Council Head of the Supply Chain and Trade Finance division at iGTB, says that conventional trade finance has become relatively stagnant. Pande explains that low commodity prices in the Middle East – and therefore a drying up of government liquidity – is leading to a reduction of subsidies, particularly around oil and gas.
In agreement, S&P Global’s regional expert, Karim Nassif, explains that in response to the subsidy reform, investors are increasingly turning their attention to renewable energy financing. It is likely, therefore, that we will see a significant increase in the number of clean energy projects, such as wind farms and solar power generators, materialising in the Middle East over the coming years.
The full article can be viewed on pp.23-25 of the magazine, which can be viewed in full here (please note the paywall).