Emerging markets to see net capital outflow in 27 years: report
Xinhua, October 2, 2015 Adjust font size:
Net capital flows to emerging markets in 2015 will be negative for the first time since 1988, the Institute of International Finance (IIF) said in a report on Thursday.
The institution estimated that among the 30 emerging economies it has surveyed, there will be 540-billion-U.S.-dollar net capital outflows this year, compared to net capital inflows of 32 billion dollars in 2014.
The net capital outflows would continue at a moderate pace of 306 billion dollars in 2016, on the expectation of the subdued growth prospects for the emerging market economies, as well as the U.S. Federal Reserve's policy tightening, the report said.
The institution expected the growth rate of emerging markets to reach only 3.5 percent this year, the lowest since the 2008 global financial crisis, and will moderately rise to 4.2 percent in 2016.
The IIF also warned of risks of high-level non-financial corporate debt to gross domestic product ratio in emerging markets.
"As monetary policy continues to diverge and the Fed begins liftoff, countries with large amounts of corporate debt, especially in U.S. dollar, will face difficulties, with rising prospects for corporate distress, weakening capital investment and growth," said Hung Tran, executive managing director at the IIF. Endi