We project non-resident flows of $128 bn to CEEMEA countries in 2021. Higher FDI and the IMF’s SDR allocation are the most important drivers. Excluding one-offs, however, flows will remain below pre-pandemic levels. G3 tightening will likely reduce investors’ appetite for EM assets in 21Q4. But further rate hikes in CEEMEA should improve portfolio flows in 2022. Non-resident flows to the region are estimated to reach $98 bn next year.

The MENA region has weathered the economic storm from the health crisis. The economic recovery continues to gain momentum. Higher energy prices will improve the fiscal and current account positions in oil exporters. In oil importers, deficits, government debt, and unemployment will remain high. 

The world economy is unlikely to experience a synchronized recovery from the COVID-19 shock. Despite robust global growth of 5.8% and 4.8% in 2021-22, we see uneven and fragile prospects. Emerging markets will be vulnerable due to the early withdrawal of monetary and fiscal support. Furthermore, vaccination progress differs considerably as the Delta variant continues to spread. A further weakening of growth in China could have important effects on the broader EM universe. Despite an expected tightening of global liquidity, we still see an EM “taper tantrum” as unlikely. We project non-resident flows to emerging markets excl. China to reach around $850 bn in 2021. Driving factors are a recovery in FDI, strong portfolio debt flows, and the IMF’s SDR allocation. Looking ahead, our main concern is ”secular stagnation” in EM following an incomplete recovery.

Building on the IIF’s previous work on the latest trends and developments in cyber insurance coverage, this IIF staff paper, the third in our series, focuses on ongoing cybersecurity challenges and their effect on the pricing, terms and conditions, and availability of cyber insurance.

ESG funds saw net inflows of $110 billion in Q3 2021—the slowest pace of inflows of the past four quarters—of this total, emerging market securities attracted a sub-par $4.8 billion of ESG fund flows—less than 5% of the total; LatAm received the largest share of ESG fixed-income flows, while EM Asia attracted the most ESG equity flows; Substantial divergence in ESG fund classifications highlights the lack of commonly accepted disclosure standards; Around 20% of the EU fund universe is classified as ESG under the EU Sustainable Finance Disclosure Regulation (SFDR).

The IIF has submitted a letter to the EBA and the European Commission on the treatment of third country branches. 

The IIF Sustainable Finance Monitor covers key developments in the global sustainable finance agenda. In the September 2021 issue, we discuss official-sector approaches to mandatory TCFD implementation, share updates on policy and regulation, latest developments on frameworks, tools, initiatives, and key research insights.

The September 2021 edition of the Insurance Update provides targeted updates on IIF insurance activities and events. 

China's post-Covid stimulus was more restrained than after the great financial crisis (GFC) even though the Covid shock was about twice that by GFC in terms of the damage to GDP growth.

The IIF Sustainable Finance Official Sector Calendar provides a quarterly update on upcoming events, deliverables, and policy/legislation relevant to sustainable finance from global platforms, coalitions, and standard-setters.