LONDON (Reuters) – Emerging markets are expected to attract $1.06 trillion in foreign direct investment, portfolio and bank flows this year, with China receiving the lion’s share, latest estimates from the Institute of International Finance (IIF) showed on Thursday.
It predicts developing nations to see $500 billion of foreign direct investment. Portfolio investments will comprise $374 billion and banking-related flows $191 billion.
China will account for just under 40% of all flows, Sergi Lanau, deputy chief economist at the IIF calculated.
“We think EM capital flows in 2021 will not be as strong as late last year,” Lanau said in the note.
“Improving EM growth will be a pull factor that attracts flows and so will high commodity prices. However, push factors are more of a mixed bag,” he said, adding that strong growth across developed markets was positive though financial conditons appeared less favourable.
Portfolio inflows into emerging markets ex-China slowed to $75 billion in the first three months on this year, compared to $230 billion in the fourth quarter of 2020.
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