Global trade volumes are big and getting bigger. Admittedly, the last few years have been rough for importers and exporters alike, but the long-term trend is still up. To this end, it is important to structure businesses to take advantage of it. Having foreign currency accounts in an offshore bank can help international traders expand their business into new geographies, diversify their customer base and support pricing strategies. Transacting business through these accounts is easy and convenient.
Hardly anyone will look back at the global economy in 2013 with fond memories – even the emerging markets took a hit – but 2014 is shaping up to be a much better year. According to a survey conducted by Grant Thornton, the prospects for recovery have improved in developed economies such as Germany, Japan, the U.K. and the U.S. The audit, tax and advisory firm notes that a resumption of growth in these countries could boost global GDP significantly.
There is a glimmer of light in other parts of the world as well. The economies of developing Asia – particularly China, India and Indonesia – are expected to expand. Moreover, strong growth is expected in Sub-Saharan Africa and the Middle East. While Latin America’s overall economy will likely remain subdued, there are areas of promise. Mexico, for instance, is undergoing reforms that could result in increased local and foreign investment.
Furthermore, business leaders are more optimistic: 40% of survey respondents expect profits to climb in 2014, compared to 35% in 2013. Those in Eastern Europe and North America are most bullish, followed by Latin America, the Nordics and the BRIC countries. As evidence, they say they are planning to step up their investments in 2014.
World Trade Organization statistics show the dollar value of world merchandise exports in 2012, the latest year available, was $18.3 trillion. That will likely increase as economic prospects improve during 2014.
“Those engaged in international trade should be thinking about how to optimally structure their business including how they price goods and services as well as make and receive payments,” commented Mr. Filippo Alario, Executive Director, at Belize Bank International Ltd.
Let’s say an import/export company in Latin America is engaged in ecommerce especially with the U.S. and Europe. The company can hold two separate offshore bank accounts denominated in U.S. dollars and euros. Such a structure helps reduce the importer/exporter’s risk of fluctuating exchange rates. In addition, they have the flexibility to invoice and make payments in two major currencies via wire transfer or other means and easily transfer funds between accounts. This not only offers greater convenience for trading partners, but it also provides a platform for global expansion and account holders are not subject to currency controls.
Offshore bank accounts are an important tool for anyone involved in international business. Companies can take advantage of various corporate structures to conduct their transactions. Moreover, there is no restriction on incoming or outgoing transactions, allowing for free flow in and out of the account.
The economic cycle has finally reached a stage where businesses can start planning for the future. Now is the time to consider setting up offshore foreign currency accounts as an enabler for executing global strategy.
The information contained in this document is for information purposes only and not for the purposes of providing legal advice. You must not rely on the information in this document as an alternative to legal advice from your attorney or other professional legal services provider. If you have any specific questions about any legal matter you should consult your attorney or other professional legal services provider.