Trade Finance TV: Banking on uncertainty

While trade bounced back from Covid and supply chain crises in the first half of 2021, this rally has not lasted. Sharp rises in inflation, interest rates and the prices of raw materials and energy inputs continue to be growth dampeners. This episode welcomes three trade experts who share their outlook on what will drive trade in 2023.

“The recession does not look quite as severe as everyone thought,” says Dr Rebecca Harding, Independent trade economist, who explains why the uncertainty surrounding prices, supply chains, energy security and the ongoing Russia/Ukraine conflict isn’t going away.

According to Deutsche Bank’s Global Co-Head of Trade Finance and Lending, Atul Jain, “2023 represents the great unlocking of multiple years of pent-up demand”.  As a result, he anticipates “higher volumes, paired with higher prices across every asset class; the combination of which will drive significant trade finance growth this year, led by commodities”.

Chris Southworth, Chris Southworth, Secretary General of ICC United Kingdom, says that “it will take time to rebuild completely post-pandemic” and highlights how Brexit had “exposed the UK economy” when it comes to trade. However, he commended the new UK-Singapore Digital Economy Agreement (June 2022) that has, he says has “set a completely new gold standard” with transaction happening in minutes, not months”.

Tune in to hear more from our topical trio!


  • Atul Jain, Global Co-Head of Trade Finance and Lending, Deutsche Bank
  • Chris Southworth, Secretary General of ICC United Kingdom
  • Dr Rebecca Harding, Independent trade economist


  • Clarissa Dann, Editorial Director, Deutsche Bank AG

Transcript of interview:

Clarissa Dann: While trade bounced back from COVID-19 and supply chain crises in the first half of 2021, this hasn’t lasted, has it? We have in the studio today three trade experts who will be sharing their outlook on what will drive trade in 2023.

Dr. Rebecca Harding: The good news is that the recession doesn’t look as though it’s going to be quite as severe as everyone thought it was. It’s maybe not a global one anyway. Europe and the United States could possibly dodge a recession. We’re seeing inflation perhaps come down a little bit. We’re beginning to see energy prices come down as well. And the crisis of energy across Europe didn’t happen in the way that we thought it would over the winter.

There’s a lot of uncertainty whether or not central bank policymakers will keep the interest rates high in order to be able to keep inflation under control. We’re not quite sure what will happen with prices because we don’t know about supply chains. There’s a possibility of more activity in Russia, Ukraine, which might have an impact on energy. So there’s all sorts of things that are uncertain in this outlook, shipping costs and so on. So we have to treat it with sort of, well, mildly optimistic, but there’s a lot of downside risk.

Atul Jain: 2023 represents, from my point of view, the great unlocking of multiple years of pent up demand. As a result, I expect to see both higher volumes and across almost every asset class, higher prices. The combination of which will drive significant trade finance growth this year. And this is being led by all things commodities and different to the past, with governments really operating as a key source of the stimulus.

And so while there is plenty to be concerned about including war, inflation and interest rate uncertainty, I think we come into the year with an inherent confidence borne out of these being largely known notes, so as a result of which I think global corporates and we as global banks supporting them feel we have a much more stable footing from which to plan and problem solve.

Chris Southworth: I think there are a lot of positive developments that will take time to rebuild, completely post-pandemic. There will be continued disruptions, a lot of restructuring of supply chains going on and that will go on for some time I think. Around the UK the fundamentals are where the problems are; the lack of resilience and Brexit has undoubtedly exposed the UK economy to fundamentally sort of a lack of a trade plan. It was interesting in the budget there was no mention of trade. Trade touches 60% of the economy, so I find that quite strange. The Government’s job is to pull every lever and we’re certainly not pulling the trade lever. But if we did do that and we were very focused, then the UK would rebound back much faster than the pathway we’re on at the moment, which looks pretty long and painful.

Clarissa Dann: Atul, from your point of view, which economies are prioritising trades, and are there any that stand out?

Atul Jain: The most obvious one to me is Bangladesh; an incredibly resilient, developing, high growth economy and one anchored on multiple, seemingly conflicting, yet all critical strategic relations. I mean with the US around RMG exports in goods, with China around raw materials and defense, with Russia around cooperation for nuclear power, even still. With Europe around critical machinery for infrastructure and pharma, and especially from Germany, with the Middle East for fossil fuels, with India around many topics, including green energy, and the list goes on. There is a lot written about the increased weaponization of trade, but I look at these examples as opportunities to flip that on its head and just remind ourselves of the immense possibilities trade still has to be used as an instrument of stability and growth.

Dr. Rebecca Harding: I absolutely agree with that. And I think we’re seeing the world go through a massive technological change which is actually changing the structure of trade. There’s opportunities for emerging economies sitting outside great power conflicts and saying, well, we will trade with whoever does good for our own trading structures. And so the role of trade finance is now to elevate itself above that political level because it has become so embroiled in everything that we do because of the way in which the conflicts are now being fought between East and West.

Chris Southworth: Countries like the UK, Japan, Singapore, what I call the sort of second tier economies have a really important role here to connect east and west and north and south. The new UK-Singapore Digital Economy Agreement sets a completely new gold standard. It’s a fully comprehensive framework, so it’s faster, it’s more integrated, finance is part of that flow, transactions are happening in minutes and hours, not months. In digital, not paper. Finances transacting at the same time as the ownership of the goods. That’s going to be super interesting because that’s never been done between the East and the West to date. We’re hoping it’s going to unlock the connectivity between the West, who are quite some way behind the East when it comes to digitalization and modernization of the trading system. I think that’s a really important point.

Clarissa Dann: The other thing is the diversification that economies are trying to achieve. Which economies do you are getting it right? And which governments do you think are really supportive?

Chris Southworth: Africa is one of the most exciting regions of the world right now. That Africa-Continental Free Trade Agreement is absolutely colossal. They are absolutely focused on addressing these long term structural issues that Africa has suffered from across the continent, which we all know is asset rich, rich in people, it’s got enormous potential, but there are other places. I just came from the Caribbean nations and there is a real sense of harmonization, interoperability, they’re absolutely watching these modern agreements, how do we use those to unlock growth? You know, I think overall there’s a lot of good work going on.

Clarissa Dann: Nothing has concentrated the collective mind more than achieving net zero pledges. How is this shaping trade?

Dr. Rebecca Harding: The very brutal fact is that $1 in every five finances a positive contribution to sustainable development goals, creating jobs at things like facilitating economic growth. It’s things like facilitating innovation, the peace and justice, clean water, clean energy. Those are all things where we need to think very long and very hard about how we do this as a global community, and it’s an absolute priority. So it has to drive the way we think in trade now.

Chris Southworth: Yeah, this is the big existential challenge. And it’s not just net zero, by the way. It’s now nature positive. Don’t forget we’ve got a big biodiversity agreement. I see digitalization as the enabler to get us full transparency on what the goods are, who’s owning the goods, who’s paying for the goods, where are the goods? What’s sustainable? What’s not? How do we mitigate it? Because up to 80% of trade relies on natural resources and is moving goods from A to B and obviously impacting the planet and the climate around us.

Atul Jain: We’re at the very start of a multi-decade CapEx supercycle, and this is going to completely transform both developed and developing markets. But I do think that this will largely play out in terms of haves and have nots when it comes to the raw materials of energy, necessitating entering into, to use Rebecca’s term of multi-polar trade, while in the meantime investing significantly in energy security and independence. I mean, we’ve clearly seen this in the US. So the most prominent example being the Inflation Reduction Act, which was $370 billion towards renewable energy, energy transport, clean storage. And similarly in Europe, so on the one hand, investing in partnerships with Australia to supply rare earth minerals, committing $130 billion to Africa for renewable energy, while at the same time building up domestic mining, refining and recycling capability. And so I think the thematic is preserving self-interest and maximizing optionality, and it’s a relatively delicate balance.

Dr. Rebecca Harding: If we can agree on standards I actually think the trade finance has this huge ability to say we’re doing this because we actually believe in the planet. We can price for this. We can make sure that we’ve got capital. And so in reserve, should some kind of climate catastrophe happen, but we are actually trying to make the planet sustainable through the conversations that we’re having with our clients.

Clarissa Dann: Let’s look at 2023. Are we really banking on uncertainty or can we do a bit better than that? Quick response from each of you please as we close.

Chris Southworth: I think we’re going to see continued disruption because there are movements within our global value chains, whether it’s energy transitions, whether it’s infrastructure challenges, particularly around that digital economy, rare earth minerals and so on. The fundamentals of the fast growing economies will start to play out more and more over this year and 2024, I think.

Atul Jain: Let’s not kid ourselves. We’re in the midst of recovery and it’s fragile. But if I were to place some sort of few non-negotiable growth themes, first is open to working capital optimization for exactly all the pressures corporates are under more strategic, more innovative thought put into supply chain resilience, inventory, finance, factoring asset as a service.

Second, government led transformational CapEx to fulfill the energy, housing, manufacturing, infrastructure, etc. it demands of the coming decades.

And third, sustainability, which runs through the heart of every corporate client dialog we have on at the moment, particularly how we can help finance their transition. We as providers of the capital needed can influence that, and we have a tremendous voice and responsibility to do so.

Dr. Rebecca Harding: The key thing is to turn uncertainty into risk because we can manage risk. I think we’re beginning to know the scale of the problem with Russia, Ukraine. We’re beginning to know the scale of the problem with China, although that’s a huge unknown at the moment. But all of those things are beginning to get a little bit more quantifiable. And as a result, we’re beginning to turn now unknown unknowns into known unknowns. And we can do something about those.

Clarissa Dann: Please visit TRADEFINANCE.NET and you can also find us on Spotify, Apple Podcasts, Google Podcasts and Stitcher.

Published on March 10, 2023

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