The Institute of International Finance (IIF) estimates that net capital flows to emerging markets will decline in 2012 as the European debt crisis still affects the global economy.

According to the IIF, net private capital flows to emerging market economies fell in 2011 relative to 2010 and are likely to be lower again in 2012 by $100 billion (to $912 billion), even though the macroeconomic performance of emerging market economies remains substantially better than that of mature economies. Rapid mood swings are also apt to make market-based and banking related flows quite volatile, and their projections are subject to “unusually large downside risks owing to continued tensions in the Euro Area.”

Source: IIF

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