2012 October Capital Flows to Emerging Market Economies

October 13, 2012

The outlook for net private capital flows to emerging market economies has brightened somewhat. While 2012 will see the second straight year of declines by around $40 billion relative to the previous year (to $1,026 billion), this would be $114 billion more than estimated in our June Capital Flows Report. Higher debt flows—commercial bank flows and bond purchases from non-bank sources—account for the bulk of this upward revision. Renewed large-scale asset purchases by the U.S. Federal Reserve and a decline in risk aversion since the middle of the year have contributed to this improved prospect.