Economic Research

Capital Flows to Emerging Market Economies

April 15, 2010

The global economy and net private capital flows to emerging economies are now each in a recovery phase, with both feeding off each other. A return to buoyant local credit market conditions has been important to the restoration of strong growth in domestic demand in Emerging Asia, especially China. In turn, this has been the leading edge of the global recovery. But gains in net private cross-border capital flows have been more limited in this upswing to date, and are thus not contributing much to the rebound. Our estimates of net private capital flows to emerging economies have been revised down slightly for 2010 and, especially, 2011. We now expect net flows to total $709 billion in 2010 and $746 billion in 2011.