The Capital Flows Report is one of the IIF's flagship publications and is generally issued three times a year: in January, and around the time of the IIF Spring and Annual Membership meetings (usually May/June and October).
The report provides data on the magnitude and composition of private capital flows to (and from) a sample of 30 key emerging market economies in the four major regions. We produce forecasts for the current year and the year ahead. The report also provides analysis on the factors driving those flows and considers both likely and desirable policy shifts.
The data are widely used and referenced in the press and the international financial community. For more detailed information on our capital flows data, please consult our User Guide, which answers frequently asked questions (FAQ) and explains key concepts used in our report. If you have further questions about our analysis, please contact Robin Koepke.
Capital Flows Publications
December 04, 2013
We present evidence suggesting that the Fed’s impact on portfolio inflows to emerging markets may be more nuanced than widely assumed. We estimate a simple econometric model indicating that the recent retrenchment episode was primarily driven by a shift in market expectations towards an earlier tightening of Fed policy, rather than a markdown in expectations about EM economic performance. Looking ahead, our model suggests that the Fed’s impact on EM portfolio inflows depends on the pace of Fed exit relative to market expectations and the volatility of market expectations over time. A slower than expected Fed exit and stable market expectations would tend to boost portfolio inflows, while a more rapid exit than anticipated could result in renewed retrenchment, particularly if market expectations were to fluctuate widely.Read More
October 07, 2013
Capital flows to emerging economies have seen a sharp retrenchment since mid-May 2013, prompted in part by a shift in market expectations towards an earlier normalization of U.S. monetary policy. In the immediate future, EM capital inflows look set for a rebound, in part because the Fed has delayed its tapering of asset purchases. We project that this recovery will be sustained through 2014, barring any major shift in market views about the course of Fed monetary tightening. Capital inflows are likely to be less buoyant than in recent years, however, as the fundamental underpinnings of EM growth have deteriorated.Read More
June 26, 2013
The environment for capital flows to emerging economies has worsened recently. Global risk aversion has surged amid concerns about the duration of ultra-easy U.S. monetary policy, sending ripples through EMs. EM currencies have plummeted in recent months, driven in part by a reversal of portfolio equity flows and reduced bond inflows since March. Overall, we project that private capital inflows to EMs will amount to $1,145bn this year, a decline of $36bn relative to 2012. Capital outflows by EM residents continue to grow, with “private” (non-reserve) outflows projected to reach $1 trillion in 2013, a 10-fold increase since the early 2000s.Read More
January 22, 2013
Private capital flows to emerging economies have revived strongly, supported by a generally more risk-friendly attitude of investors since mid-2012. The macroeconomic backdrop remains unusually favorable for private capital flows to emerging economies. On the one hand, very easy monetary policy in mature economies and the prospect of poor returns is “pushing” money out of those markets. On the other hand, higher growth in emerging economies, combined with higher interest rates is “pulling” funds in. This “push” versus “pull” debate has taken on new vigor following the latest round central bank easing, notably by the U.S. Federal Reserve. Our research shows that both sets of factors are important.Read More
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.Read More
June 07, 2012
Net private capital flows to emerging market economies remain quite volatile and subject to disturbance from the Euro Area crisis. They fell in 2011 relative to 2010 (to $1,030 billion from $1,088 billion) and are likely to be lower again in 2012 ($912 billion), even though the macroeconomic performance of emerging market economies (and thus the return on investments there) remains substantially better than that of mature economies. Rapid mood swings are also apt to make market-based and banking related flows quite volatile. While we have raised our capital flows forecasts since our January report, the projections are subject to unusually large downside risks owing to continued tensions in the Euro Area.Read More
January 24, 2012
Net private capital flows to our sample of 30 major emerging market economies have faltered in recent months. Net flows are now estimated to have been $910 billion in 2011, and are projected to be $746 billion in 2012. Our latest estimate for 2011 is $143 billion below the full year forecast made in September 2011. Although our dataset is annual rather than quarterly, this would be consistent with a sharp drop-off in capital flows beginning late in the third quarter of 2011 and extending through Q4. This weakness has persisted into 2012. Our lower projection for 2012 ($338 billion less than in September 2011) essentially extrapolates the weakness evident in flows in the last few months of 2011 through the first half of 2012.Read More