Data from the Institute of International Finance (IIF) revealed that the emerging markets will attract $42.3 billion in net capital inflows. Turkey is expected to have the highest capital inflow at $51.3 billion among emerging markets while South Korea is estimated to register a capital outflow of $77 billion. The IIF report stated that Turkey, Argentina, Brazil, Chile, Colombia, the Czech Republic, India, Indonesia, Mexico, Poland, South Africa and Ukraine are emerging markets that will enjoy net capital inflows this year. The report puts forward, however, that China, Hungary, South Korea, Russia and Thailand will register strong outflows.
Twelve emerging countries are expected to record capital inflows this year and the amount is estimated to reach $264 billion. Moreover, $221.7 billion will leave five countries from which capital will flow out. Accordingly 17 emerging markets, including Turkey, will see entrance of $42.3 billion of net capital in total.
Last year, emerging markets attracted $88 billion in net capital inflows. Accordingly, the capital inflow for these countries is expected to decrease by $47.7 billion in one year. The drop in U.S. 10-year bond yields and the rising dollar index, the tightening monetary policy of central banks as part of normalization steps, and concerns about trade wars are among the reasons for the fall in capital inflows to emerging markets.
By the end of this year, IIF data highlighted, Turkey will register the highest capital inflow among emerging markets. Last year, the country saw the inflow of $39.1 billion and the IIF expects that a total of $51.3 billion will flow into the Turkish market this year.
Turkey attracted $25.8 billion in the first four months of the year, the IIF said in the report.
Argentina follows Turkey in IIF's forecast as the country is expected to receive $41.9 billion. Brazil and India will see the inflow of $40.4 billion and $20.5 billion, respectively. While Indonesia is estimated to receive $15.2 billion, Mexico will grab $15.2 billion from $264 billion estimated to flow into the emerging markets worldwide.
By the end of the year, Colombia will receive $13.7 billion and South Africa will see the inflow of $12.9 billion. While the Czech Republic will attract $9.3 billion from global money markets, Chile will grab $7.7 billion. A total of $6 billion is expected to enter Ukraine and $4 billion will be transferred to Poland, according to the IIF report.
According to IIF calculations, the highest capital outflow in emerging markets will be seen in South Korea. A total of $77 billion is expected to leave the country. During the first four months of the year, $22.3 billion was transferred to other emerging markets from South Korea.
Following South Korea, China is forecast to experience the second-highest capital outflow with $76.1 billion. The Chinese case is reportedly affected by the developments signaling a trade war with the U.S.
Hungary is expected to see a capital outflow of $9.6 billion, while $22.6 billion in capital is expected to leave Thailand and $36.4 billion will flow out from Russia.
