DUBAI Nov 12 Uncertainty over the global
economy is increasingly prompting Middle Eastern companies to
use financial instruments which offset the risk of non-payment
by foreign trade partners, HSBC's regional commercial
banking head said.
In Saudi Arabia, 42 percent of exporters believe there will
be an increase in buyers failing to settle trade transactions in
coming months, with 30 percent of importers expecting more
suppliers to fail to deliver goods, according to the bank's
Global Connections Report, released on Monday.
Meanwhile, 53 percent of Egyptian businesses surveyed for
the report cited payment defaults and 42 percent mentioned
supplier failures as barriers to future trade growth.
However, trade in the region is continuing to grow; 94
percent of Saudi firms expect their trade volumes to expand or
stay steady in the next six months. So companies are
increasingly interested in instruments that limit risks, such as
letters of credit and export credit insurance, HSBC said.
"I think this is a reflection of the economic situation out
there, and the desire to find mitigants to make sure people can
continue to take advantage of the growth in trade flows and
ensure they are protected against payment risk," Tim Reid,
HSBC's regional head of commercial banking, told reporters.
"The message is one of confidence in trade but a slight
underlying concern that they need to tread carefully, given the
concern around the ability of some of the trading partners to
meet their obligations."
Many countries in the Middle East and North Africa have seen
their economies disrupted by political turmoil in the past two
years. While there may continue to be some disruption in the
short term, the longer-term outlook is encouraging, HSBC's
report said, predicting Egypt would eventually record annual
export growth of between 12 and 15 percent.
"We have no doubt about the medium- to long-term potential
for Egypt to grow," Reid said.