The Mercury

Emerging world to lure $1 trillion funds

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Private capital flows to emerging markets should top $1 trillion (R6.7 trillion) this year, fuelling growth in the global economy, an internatio­nal banking associatio­n said yesterday. But the Institute of Internatio­nal Finance (IIF) warned against countries using capital controls to manage those flows, saying they should instead use other methods to fight inflation, including allowing their currencies to firm. The IIF said net private capital flows to 30 key emerging market economies were likely to reach $1.041 trillion this year and rise to $1.056 trillion in 2012. Capital flows to those emerging economies had jumped about 55 percent last year, to roughly $990 billion. “The high level of capital flows to emerging markets reflects the rising weight of these economies in the global economy and their very strong performanc­e relative to the mature economies in recent years,” said IIF managing director Charles Dallara. The new estimates for 2011 and 2012 were both about $80bn higher than the IIF’s projection­s in January. – Sapa-AFP

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