The IIF estimate of net private capital flows to a sample of 30 key emerging market economies this year is $619bn, down from its March estimate of $731bn.
This outcome is also a marked decline from the revised estimate of net private inflows in 2007, now at $899bn (up from $782bn in March) and represents the high watermark for flows in the current cycle.
Acknowledging the difficulties in assessments for 2009, in light of the current turmoil, the IIF forecast is for net inflows of $562bn, down by about $60bn on 2008. The IIF notes that emerging markets have suffered recently from the slump in net interbank lending, which it expects to remain durably lower while bank capital constraints dampen both willingness and ability to lend.
In assessing global output growth, the IIF notes that the global economy has slowed significantly during the past year and is now likely to post relatively meagre growth of about 2.3% for 2008 as a whole, with mature economies growing at a much reduced rate of 1.1% and emerging economies down to 6.4%.
The IIF’s 2009 forecast, even allowing for significant continued outperformance from emerging economies of 5.5% in aggregate, shows global growth of just 1.6% (mature economies registering 0.5%), the weakest performance since 2001.