The main developing economies would register net capital inflows this year, up to US$903 billion, said a report published by the Institute of International Finance (IIF).
The major developing economies would register this year a increase of about a third in net capital inflows, up to US$903 billion, although much of that increase depends on global growth being maintained, said a report published by the Institute of International Finance (IIF).
The work, which covers 25 emerging market countries, including China, India, Russia and Mexico, is expected to this net increase of 32% This is mainly due to a strong recovery in foreign direct investment and cash allocated to equity portfolios.
Although Global growth is forecast at 3.1% this year, which would be below the average of 3.8% recorded between 2000 and 2019. “A global ‘soft landing’ scenario offers a positive outlook for capital flows to emerging markets,” said the report, released late Wednesday.
“He world trade has also shown signs of a modest recovery in recent months, driven by a rebound in EM trade volumes,” he added.
The importance of capital flows
The Capital flows are a component of a country’s balance of payments, along with the current account balance and changes in reserves. Non-resident capital flows consist mainly of foreign direct investments (FDI), as well as portfolio investments in stocks and bonds.
Net FDI inflows are expected to increase to $426 billion in 2024, while net flows into foreign portfolios could reach $259 billion, up from $161 billion in 2023, as China, a massive source of outflows in the last two years, recovers modestly.
The report universe includes six economies from emerging Europe, Latin America and Africa/Middle East, and seven from Asia.
IIF projections for capital inflows to emerging economies are based on an acceleration in economic growth of the emerging marketscoupled with “significant” rate cuts in developed economies.
The basic hypothesis of the IIF points to a easing inflation in the United States in the second half of this year, with the prospect of a 25 basis point interest rate cut by the Federal Reserve later this year, and a policy rate of 3.7% by the end of the year. the next year.
Source: Ambito
