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Turning the Corner...Slowly While signs of recovery are still tempered with tough realities, it is clear that these signs are increasingly becoming evident – consequently, there are some fairly good reasons for optimism in light of the worse-case scenarios we were hearing around this time last year. The decade-long global recession and widespread economic implosion predicted by some has not, thankfully, been a consequence of the initial credit crisis. Although we are still working through difficult issues, and watching warily for other triggers of economic difficulty, we can legitimately take a moment to reflect on a few lessons learned, while applauding the successes achieved. At the highest level, one could argue that the scope of the crisis has engendered and motivated a spirit of international collaboration unseen, perhaps, since the end of World War II. Coordinated efforts on numerous fronts, from macroeconomic measures to fiscal policy to trade, have been critical to the effectiveness of crisis countermeasures. Additionally, the range of collaborative initiatives – touching commercial interests as well as political interests – has been necessarily broad. Despite a wide spectrum of views, opinions, interests, and belief systems, collaboration has been both indispensable and effective. Trade has again been at the centre of the discourse, both as a victim of the crisis and as an important contributor to its eventual reversal. Protectionist sentiment has been carefully and effectively managed in many, though not all jurisdictions; and while there has certainly been impact on emerging and developing economies, it appears that even in that context, the reality has been less harsh than the expectation.The voices of cautious optimism related to the global recovery are increasing in numbers as well as in the volume and frequency of their communications. In addition to macro-level collaboration, the crisis has demonstrated – undeniably – the integrated and interdependent nature of the world in the 21st century. China, India, and other key economies – including the other two members of the BRIC: Brazil and Russia – now enjoy a greater (some would argue overdue) profile in international matters, as OECD economies realize that the global economic landscape is evolving. While the familiar US-China importer/exporter, consumer/manufacturer dynamic remains a reality, its character has been reshaped by the crisis; additionally, its energy and power have been dissipated to some extent, as a result of measures taken to combat the global crisis. China has been forced to turn inward to a degree, looking to domestic consumption (some facilitated through credit) to fuel a recovery; this is very similar to the way that India used that same economic force to insulate itself, somewhat, from the crisis. At the same time, China continues its insatiable quest for resources with aggressive investment strategies and initiatives in markets from Canada to Nigeria. While there have been significant impacts in China, dire predictions about stalled growth and reversals of fortune have been recently recast by some commentators. In one instance, the crisis was referred to as a "speedbump" on China’s continuing road to development, wealth, and power. Countries in Latin America, including Brazil, have once again demonstrated their resilience and decisiveness in the face of crisis; while regions long accustomed to trade, such as the Middle East, are focusing some energy on intra-regional commerce as one way to regain momentum. Large infrastructure projects in Saudi Arabia, the GCC, and other markets have been important in offsetting some of the impacts of the crisis. The global crisis has provided an opportunity for untested leaders to prove their mettle, and, in many instances, the tough decisions and unaccustomed measures have softened the impact and helped recovery – with a combination of effective collaboration and independent action. Collaboration has extended well beyond the most senior levels of government to the actions of international financial institutions, such as the IFC/World Bank and numerous other regional institutions. National export credit agencies, such as ECGD in the UK, EXIM Bank in the US, and EDC in Canada, among others, have worked and innovated with the intention of responding to urgent needs for credit, insurance, and guarantee solutions in support of international trade. Perhaps equally important in the long run, the crisis has provided impetus for serious discussion around business and financial regulation, even in the most ardent, free-market oriented economies. The stewardship dimension of executive leadership is now an area of renewed focus, and careful, thoughtful regulation is under consideration in many contexts. The Canadian regulatory system, long admired, has earned much praise and profile, as have certain aspects of Shari’a Law, which prevented institutions guided by Islamic principles from falling into the toxic assets trap. Finally, the crisis has motivated businesses across the globe to look beyond their domestic markets for opportunity. Tight credit markets, shifting demand patterns, and a critical need to secure additional business has motivated businesses of all sizes and across all industry sectors to look internationally and to explore non-traditional markets. |
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Northstar Trade Finance was formed in 1994 to support new and growing exporters by filling a market niche that was not being served by conventional sources of trade finance, but which is nonetheless critical to exporters' success in world markets.
