Factoring and Commercial Finance grows again, supporting economic expansion in the EU
15 May 2017
Final analysis of data collated by the EU Federation for the Factoring and Commercial Finance Industry (EUF) shows that factoring and commercial finance volumes in the EU grew overall in 2016 by 6.2% to €1.5 Trillion.
This rate of growth clearly outpaces the increase in GDP in Europe and again demonstrates the vital role factoring and commercial finance is playing in developing the real economy, providing principally SME businesses with much needed working capital.
This success story is about real growth, real employment and demonstrable business success in supporting the ongoing recovery. Around €200Bn of funding is supporting around 180,000 European businesses.
With factoring and commercial finance now representing around 10.4% of EU GDP, this is a powerful and important contribution to EU economic development and success.
Erik Timmermans, Chairman of the EUF, noted: "The continued growth in our Industry demonstrates again the vitally important role it plays in supporting the real economy in Europe. It’s great news for the Industry to be able to support so many European businesses in their development. It’s again critical that legislators and regulators recognize this Industry is a key contributer to wealth creation in Europe.”
The final 2016 world factoring statistics confirm the preliminary results: the Industry has overall held its pace with many markets showing significant continued growth. These advances have however been offset by a continued reduction of volume from China, where the downturn has also affected international figures of trade counterparty countries such as the USA - although in this case the reduction appears to have mitigated with an increase in domestic business, at least in respect of FCI Members.
The total volume determined for 2016 amounts to 2,376 billion euro, slightly higher than in 2015 where it reached 2,367 billion euro. FCI Members account for close to 60% of the world domestic volume, 84% of international and 64% of the total.
Cross border two factor volumes in the first 4 months of 2017 show a 3% increase to suggest that hard times are over and that this sector will return to positive territory this year.
European markets show an increase close to 2.5%; however, it must be remembered that the figures collected are expressed in euro and UK, highly influenced by its currency fluctuation, represents over 20% of the European volume. Simply converting the home currency figure into euro records a drop of over 13% while a more complex calculation to avoid biases due to the said fluctuations determines that a 1.25% increase correctly represents the market change.
The rest of the “mature” markets like Italy (close to +10%) France (+8%) and Germany (+4%) show a continued upward trend, whilst, at the other extreme, Turkey’s reduced exports pulled down its total market figure, continuing its decline to reach a -10%. It is worth highlighting that the Russian market increased by +20% and the Dutch by +26%.
Due to the significant reduction in import factoring volume stemming from the slowdown in China, the North America market recorded a decrease of over 5%, but the USA domestic factoring market increased by 3%.
The South American countries’ factoring volume grew by over 20% thanks to the performance of Brazil (over 50% increase), Argentina (+22%), Mexico (+17%) and Chile (+12%). The future of the Industry in the region still looks very promising and expectations are high.
Africa is the region where the preliminary figures needed to be dramatically corrected and the final growth figure is 9% which is of course highly dependent of the South African market. It is hoped that the efforts of new players soon start to show positive results.
Asia was, as said, highly influenced by China, and the final figure shows a 14% decline and by similar results of other traditional strong players such as Taiwan (-10%) and Japan (-9%). In the opposite field, we find Hong Kong (+28%), Australia (+14%) and Singapore (+4%) and nice growth figures are also reported in Malaysia, Thailand and Vietnam.
The FCI Global Factoring Statistics present on an annual basis the key factoring data around the world. They cover domestic and cross-border factoring volume collected from almost 390 members in 90 countries.