Unmet trade demand hits $2.5t despite increased SME support

FIs report 80% of banks anticipate demand to climb as trade shifts. 

The global trade finance gap remained at $2.5t in 2025, despite “significant challenges” to trade finance since 2023, an Asian Development Bank (ADB) survey said.

According to ADB, trade flows increased in 2023 and 2024, lowering the percentage of the global trade represented by the gap to 10% of merchandise trade flows. 

“While the global trade finance gap is slightly lower relative to the size of global trade in the previous study, unmet demand persists, even as financial institutions report increased efforts to support SMEs and explore new forms of supply chain finance,” it said. 

“Notably, the gap has not worsened despite uncertain market conditions during the survey period—including tight liquidity and geopolitical uncertainty.”

In India, export credit covered only 28.5% of the $284b required to support shipment volumes, whilst the United Arab Emirates’ unmet demand is estimated at about $3.3b, below 0.25% of total trade.

Africa’s trade finance gap averaged $74b from 2021 to 2024, down 20% due to Multilateral Development Bank interventions.

Emerging markets also often have very low coverage compared to advanced economies, with only 25% of trade in West Africa, 3% to 20% in the Lower Mekong, and 10% in Central America being supported.

Eighty-one percent of banks plan to support SMEs, a slight increase from 78% in 2023, as rejection rates fell from 45% to 41%. Pre‑shipment finance is also provided by over 76% of banks.

Seventy-three percent of banks expect trade finance supply to rise, 80% expect demand to increase, and 87.5% expect demand to grow as trade diversification accelerates.

The report cited various challenges in trade finance, including economic slowdown, geopolitical tensions, tariffs, insufficient collateral or security, and constraints in US-dollar liquidity.

Eighty-nine percent of banks indicate environmental, social, and governance (ESG) issues remain relevant, despite limited optimism among banks that ESG-dedicated funds will narrow the gap.

Artificial Intelligence (AI) also has potential for risk analysis and fraud prevention, according to 85% of banks, while another 55.9% are assessing AI’s potential to increase financing capacity.

To reduce the trade finance gap, 89.11% of surveyed banks advocated increasing the capacity of MDBs to provide guarantees, 87.13% to digitalise global trade, 86.14% to reduce capital costs, 83.17% to provide training for mid-tier banks and SMEs, and 82.18% to reduce compliance costs.

The report recommends expanding the trade finance register to provide an evidence base for better capital treatment of trade finance assets and accelerating trade digitalisation by 2030.

It also recommends scaling existing supply chain finance solutions and developing deep-tier supply chain finance.