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The
IIF predicted non-resident capital flows of $1.26 billion in
2019, up from $1.14 billion in 2018, and another modest recovery
next year.
"Global growth is looking more positive, but the world is a more
difficult place for emerging markets that depend on foreign
capital inflows," the report said.
Quantitative easing by G3 nations in recent years helped funnel
funds to emerging markets, in search of yield. That led to a
"positioning overhang", with investors overloaded on
emerging-market assets, the IIF said.
Flows to China accounted for much of the recovery in the first
quarter, it said. Excluding China from previous quarters showed
successive recoveries were weaker.
"Despite a positive growth backdrop, capital flows to non-China
emerging markets will recover modestly in 2019 and 2020, while
remaining short of the levels observed in 2017," the report
said.
Total net capital flows to China are projected to reach $50
billion in 2019 and $110 billion in 2020, the IIF said.
Non-resident capital inflows to Turkey should start to increase
in the second half of 2019, assuming credible structural reforms
helped to improve sentiment. But net inflows of non-resident
capital are likely to moderate further in 2019, in step with the
projected fall in output, the IIF said.
Turkey's lira has come under renewed pressure in recent weeks,
after shedding nearly 30 percent against the dollar last year.
That led to local banks halting lending to their overseas
counterparts last week, a move that spooked foreign investors.
(Editing by Larry King)
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