Magazine article Business Credit

2001 FCIB Conference: Credit Management in Troubled Times

Magazine article Business Credit

2001 FCIB Conference: Credit Management in Troubled Times

Article excerpt

Credit managers from top companies joined with international experts to tackle credit issues in the context of terrorism, money laundering and global recession.

Credit professionals from 23 states and six countries attended the Twelfth Annual FCIB Global Conference in Coral Gables, Florida on November 12-14, sponsored by Euler ACI, AON Trade Credit, JPMorgan and PNC Bank. "We have to press forward with business as usual," said FCIB president Ken Garrison, Jr. as he welcomed the participants, many of whom braved difficult travel conditions to attend the conference. He extended his gratitude to the sponsors of the conference.

Garrison noted that in the wake of September 11th and the ongoing global recession, there is a new sense of urgency in gaining first-hand information on credit management from international experts in the field. Credit managers attended conference sessions on letters of credit, export risk mitigation techniques, money laundering, credit risks in Latin America, and new credit conditions created by the antiterrorism campaign, plus an "around the world" roundtable discussion on country-specific credit issues.

Prospects for Emerging Markets

Keynote speaker Vanessa Weaver, member of the Board of Directors of the ExportImport Bank of the United States, opened the conference with an analysis of the global economy and emerging markets. Weaver outlined the synchronized slowdown in the United States, Europe and Japan, and expressed confidence that the governments in all three regions are taking appropriate steps to foster recovery in 2002. She cautioned, however, that "Any number of factors could send us into a sharper and longer slowdown." If recovery begins in 2002, Weaver believes that "It will be led by the United States, followed by Europe, and then in 2003, emerging markets will begin to recover." The rebound will be rapid after the upturn, she predicted, fueled by aggressive interest rate cuts and technology-driven productivity growth in both the U.S. and Europe. Weaver said that the Export-Import Bank and other financial institutions need to "step up to the plate and provide the kind of financing needed to allow exports to occur during 2002 so we can all pull the global economy back up and ensure that U.S. companies gain footholds in emerging markets, where most of the profits and opportunities will occur in the next decade." She noted that there has been an enormous retreat in private capital flows from emerging markets, creating serious difficulties in countries such as Brazil, Turkey and Argentina. The simultaneous downturn in the U.S., Europe and Japan, she said, has set off an unprecedented deceleration in world trade, which is also adversely affecting emerging markets.

"Private capital flows will return to emerging markets in a very selective, discriminating way in 2002 and 2003," Weaver predicted. "Many companies are accustomed to dealing with emerging markets; they understand the risks and develop the relationships they need. Most U.S. companies, however, don't think about trade with China or Thailand, for example." Weaver warned that U.S. companies "will not be able to compete in the global economy 10 years from now unless we get serious about trade with emerging markets. Europe will be able to compete. Europe is already all over Africa, Latin America and East Asia, and will continue to do well."

Weaver explained that throughout the 1990s, many developing countries instituted striking changes, including diversifying into manufacturing and away from their reliance on commodities. "They gained global market share that will position them to expand in 2003, and there will be real opportunities," she said. "Between 2003 or 2004 and 2010, the emerging markets will see even greater profits than they did in the 1990s, which was a significant period for many U.S. companies with interests in these areas. By 2003, low interest rates, global recovery, increased confidence and reduced perceptions of risk will signal the return of capital flows to emerging markets. …

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