Thursday 12 January 2017

CHAIRMAN'S MESSAGE - Sean Edwards, ITFA Chairman / Head of Legal at SMBC

Dear Members and Friends,

On behalf of the ITFA Board, I would like to take this opportunity to wish you all a very Happy New Year and all the very best for 2017. May the year ahead bring good health, peace and prosperity.

The ITFA team is currently in the process of compiling a list of scheduled events for the year ahead. The 2017 Events Calendar can be viewed on our ITFA website and will be updated on an ongoing basis. Click on this link to find out more information about our events.

To think that emerging markets would have had the run they did in 2016 following the dismal start to the year, and come out of it more than unscathed is no mean feat. Let's face it, 2016 was a challenging year for emerging markets, but comparative performance against 2015 helped alongside favourable views of EM resilience and future growth.

In December, the Fed raised interest rates by 25 basis points, indicating that in 2017 there could be yet another three rate hikes should positive economic conditions persist and warrant such a move. This unsurprisingly had an adverse effect on Emerging Markets but nevertheless ended the year with an optimistic momentum. Having said that, 2016 is inevitably not going to be repeated so we must all remain with our feet held tightly to the ground in 2017 and embrace ourselves for an era of possible higher interest rates in the US, so all eyes will be on the US dollar this year.

Amongst the themes which are likely to arise in trade this year are digitisation and a hoped-for reversal in the tide of compliance and regulation, the latter aided by pronouncements from the impending Trump presidency. In digitisation, many predict the scales will fall from the eyes of the cyber-dinosaurs as the old embrace the possibilities for new products (or maybe repackaged e-versions of old ones) along with young and start to love the productivity savings which could open whole new customer markets.

In the very first edition of the 2017 ITFA Newsletter you will find an interesting article titled ''The Global Economy: What's in store for 2017'', which was prepared by Giovanni Bartolotta, FIMBank - Senior Vice President; Head of Risk Management. One also finds the regular feature: our ‘Chart of the Month”contributed by Dr. Rebecca Harding of Equant Analytics - Trade in 2017. We have also included an article highlighting the inclusion of an Events Photo Gallery in the ITFA website.

May I take the opportunity to thank all associates, partners and sponsors for their support in 2016. Should any of our members wish to contribute to our website, and become website sponsors, please send an email to Your contribution is highly valued.

We look forward to hearing from you with any feedback you may want to share with us by sending an email to myself, any of the Board Members or to our general email,  

Best wishes

Sean Edwards

Sunday 1 January 2017

THE GLOBAL ECONOMY: WHAT'S IN STORE FOR 2017 by Giovanni Bartolotta, Head of Risk, FIMBank plc

The year that just passed, 2016, has been an eventful one. From the Brexit vote to Trump election - both unexpected and fueled by an increase in social inequality, mostly blamed on trade globalisation and immigration trends - rise in economic nationalism will inevitably shape the outlook for the year that just started. 2016 also saw the death of way too many rockstars, but that is the topic of my Rolling Stones article...

Overall, the global economy is expected to fare better in 2017, growing around 3% versus 2.5% in 2016. However, as in 2016, growth will diverge across geographies, with the US likely to benefit from the fiscal stimulus promised by president-elect Trump, large EM economies like Brazil and Russia emerging from the recession of the last two years and China achieving stabilisation of its economy, albeit at a reduced growth rate. The Eurozone remains the big question mark, with large economic imbalances between Germany and the Southern countries remaining, and anaemic overall growth. The UK, despite Brexit, will continue to grow at a higher rate than the continent, also because the expected negative effects of Brexit will not begin to manifest themselves before 2-3 years. Emerging markets as an asset class will also exhibit higher growth rates than in 2016 (expected at 4.8% versus 4% in 2016), as commodity prices have steadied and economic reform of the past ten years bears fruit, however a significant downside risk is given by the continued strength of the dollar and rising interest rates, which might deter capital and investments from these countries.

You are not alone

An important policy shift in 2016, which will be a key theme for 2017, is the fact that macroeconomic policy is not left to central banks alone and to their setting of ultralow (sometimes negative) interest rates, in the hope that this strategy alone would revive economic growth. Political pressure and rising populism (although a negative trend in itself) are contributing to an easing of fiscal policy in the advanced economies. Increased public spending, a somewhat more tolerant attitude to achieving deficit targets in the EU, promised tax cuts in the US (the magnitude of which will however need to be toned down) are all bringing back political responsibility to center stage, easing pressure off central bankers. This is also because ultralow-rate monetary policies have been largely ineffective in countering weak growth, on the contrary contributing to rising social inequality (by inflating asset prices and punishing savers). This is not to say that in 2017 aggressive monetary policies will be suddenly abandoned, however a progressive reduction of the asset purchase programme by the European Central Bank (reducing bond buying to EUR60 billion per month) and a gradual rise in US Fed rates (possibly 75bps over the year) will contribute to normalise the interest rate environment. This is also likely to put pressure on global bond prices, however price adjustments should be gradual and not disrupt financial markets.

Globalisation is not the enemy

Globalisation has been mentioned as the cause for weak growth in household income and rising inequality witnessed in many advanced economies in recent years. Offshoring, rising imports from emerging markets and immigration have, according to this argument, held down wages and contributed to a loss of manufacturing jobs. However, the pace of trade opening has actually slowed in the US and Europe in the last few years, while the decline in the share of manufacturing jobs long predates NAFTA or China's accession to WTO. Sluggish growth in advanced economies has been more a reflection of private sector deleveraging, fiscal consolidation and weak external demand. Nonetheless economic nationalism is a feature which is destined to increase in 2017. In particular in Europe, a number of upcoming elections risk to bring anti-EU parties into power, therefore reducing openness to trade. This would harm the global economy by limiting the gains from specialisation. Trade restrictions would only benefit some producers with low reliance on global supply chains, but this would be generally at the expense of the consumer. It is undeniable that globalisation has made possible for each one of us to carry a supercomputer in our pockets (our smartphone) at a very low cost. Immigration restrictions would also be damaging for long-run growth. In Europe and the US, ageing populations have reduced labour force growth, which has however been significantly offset by net immigration of a generally younger labour force. In the UK alone - which voted against immigration with Brexit - the boost to labour supply, and ultimately to GDP growth, given by immigration has been close to 0.5% per year.

Emerging Markets: back to flavour of the month?

Emerging markets started seeing a slight reversal of fortunes towards the end of 2016, with Brazilian and Russian recessions bottoming out, commodity prices recovering and stabilising, and China seeing the benefits of its stabilisation policies. India, on the other hand, closed the year putting into place one of the bravest social experiments of all times (the demonetisation of its economy, by declaring illegal tender 85% of its banknotes in circulation). While this caused a shock to the economy in the short term, the long term effects should be beneficial, by reducing corruption and bringing most monetary transactions inside the banking system. Turkey, on the other hand, has seen unabated political tensions over the year - from the coup in March to the terror attacks of 31st December - which have weakened its investment environment and its currency, damaging the economy at large. At the moment, the outlook for Turkey in 2017 is the less benign of all major emerging markets.

Oil prices (a significant variable in the performance of emerging economies) has remained stable around 50 US dollars per barrel, also sustained by the recent production cuts agreed at OPEC level. Prices are expected to remain stable or slightly increase in 2017, as the OPEC agreement takes hold and inventories are used up by increased industrial production. Other hard commodity prices (iron ore, coal, steel, copper) have all rallied in recent months, in response to optimism about US infrastructure spending and sharp cuts in coal production in China.

To summarise, 2017 should be a year of normalisation for the global economy, however downside risks are not to be taken lightly. My top three risks are: 1) a political shock in the EU, undermining the European project, 2) a flair in inflation, causing interest rates to be lifted too fast, hence harming emerging markets and EU recovery and 3) Trump presidency turning more populist than necessary - due to his inexperience in government, harming global trade.


The ITFA Board is pleased to announce the following two new members.

Qatar National Bank is a deposit taking firm, with a consumer credit licence under the regulated permissions.

The London branch provides syndicated and bilateral loan facilities to corporate entities, including real estate loans to SPV's to facilitate Qatari borrowers to residential and commercial properties.

The branch continues to provide trade finance facilities to European companies exporting strategic goods and commodities and involved in projects in Qatar and the MENA region as well as guarantees and bonds for Qatari companies undertaking projects in Europe.

David Ringer will be the Main Delegate for all ITFA related matters.

TrustBills is an electronic marketplace for selling international trade receivables to international investors such as institutional investors, factoring companies, banks and corporates. Its goal is to be an international receivables exchange for sellers and buyers of international trade receivables with the participation of top financial service providers.

Joerg Hoerster will be the Main Delegate for all ITFA related matters.


The ITFA Board would like to take the opportunity to remind all readers, of the first ITFA event being organised in 2017 - the NERC, Northern European Regional Committee and Young Professionals (YP) event, which will take place on 01 February at Hotel Café Royal, 68 Regent Street, London. The event will commence at 3:30pm and will include an informative and educational Seminar, which is to be given by known macro economists, followed by a networking drinks reception afterwards. We ask all ITFA members to RSVP by no later than 26 January 2017. We look forward to seeing you at the event!

Another must-attend event taking place at Jumeirah Emirates Towers, Dubai, commencing on 12 February, is the GTR MENA Trade Finance Week. The ITFA Board is pleased to inform you that ITFA and GTR are partnering on this prestigious MENA event. One of the afternoon working groups being held on Day 2 of the event, ''The Art of Structuring: An Education'', the Stream B workshop, will be led by ITFA. Four of our very own Board Members, will be heading the working groups at the event; Zeyno de Vries-Davutoglu - Head of Education Committee, Lorna Pillow - Head of Communication and Membership, Anurag Chaudhary - Head of Institutional Relations, and Silja Calac - Head of Insurance Relations and Treasury.

TRADE IN 2017 by Dr. Rebecca Harding - Equant Analytics

This year promises to be an exciting one for us. With Donald Trump's inauguration, and Article 50 triggering the Brexit process, both in Q1, we are expecting the politics of trade to be at the centre of public discourse. Here are our initial thoughts on the outlook in 2017 and we look forward to sharing more with you during the course of the year. 

The picture for global trade in 2017 is uncertain and likely to be dominated by the politics of trade rather than the economics. We are expecting values in world trade to increase in 2017 by less than 0.3% with 12 out of the G20 countries set to see either exports, imports or both, shrink during 2017 (Figure 1). While we are expecting China’s exports to grow at over 4% this year, this is a long way from the heady days of 2010 and 2011 when trade grew at twice the level of GDP.

Figure 1: Forecast G20 Import and Export Growth, 2016-2017 (%), Source: Equant Analytics 2017

In the wake of the Brexit referendum, the UK’s exports are expected to see flat or negative growth in 2017. Similarly, imports are expected to increase only slightly. This is simply a function of the weaker sterling pushing export prices down and import prices up, but it sends a worrying signal for economic performance more generally as the effects of the Article 50 trigger and broader uncertainty around investment begin to take hold.


As we always promise, the ITFA team is constantly working hard to provide more value to its members. This time we have decided to create an Events Photo Gallery in the ITFA website. 

Even though all photos of ITFA organised events are uploaded on the ITFA Facebook page, for those members who have restricted access to the internet, we are now also including all photos in the website. Photos are organised and segregated in folders according to the event in question. We are also delighted to announce that images of past events have already been included in the website for all to enjoy.

May we bring to your attention that the Events Photo Gallery is found in the member area of the ITFA website, and therefore access to the images are restricted to ITFA members only. To view the gallery please click here. We hope to continue bringing more value to you, our members, in the year ahead - 2017.