Net capital flows to emerging market economies jumped sharply in 2003, gaining more than 50% to reach $187bn, and are expected to rise further in 2004, according to the latest report from the Washington-based Institute of International Finance (IIF).
Following two low years in 2001 and 2002, net private flows returned to their 2000 levels last year and the IIF forecasts robust flows $196bn this year.
The IIF, the global association of financial services institutions with more than 340 members, said net private equity portfolio flows, which amounted to just $1.1bn in 2002, reached $30.3bn last year (China and Korea alone accounting for $19bn). It forecast a volume of $28.6bn for 2004.
Bond flows, only $17bn in 2002, rose to $44.7bn in 2003 and are likely to be a fraction higher at $45bn this year, with Brazilian sovereign and corporate entities as the biggest borrowers with a 2004 total forecast at close to $13bn.
Net banking flows, which have been negative for several years and fell by $6.2bn in 2002, are projected to reach $12bn – down from $18.6bn in 2003, reflecting reduced lending to Asia. Emerging Europe’s share of net private flows is expected to increase to 27% this year from 22% in 2003, reflecting an appreciable increase in flows to Turkey. In Latin America, private flows have seen a rise of $13bn to $39bn.
