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IMF: capital inflows drop for 5th straight year


04-08-2016 06:50 BJT

The 2016 IMF World Economic Outlook said the world's emerging markets have seen a decline in overseas investment that's hurt their development in recent years but they now can better contain risk.

The IMF said in its report that the net capital inflows of the emerging markets have now dropped for five straight years. The situation was worst in 2015. Senior IMF economist Luis Catao explained the decline.

The slowdown in capital inflows has impacted the majority of emerging markets. But the IMF points out that thanks to global financial integration and more flexible forex rates, most emerging markets can manage risk. At the same time, the total overseas merger capital of Chinese firms reached almost 98 billion U.S. dollars in this year's first quarter. That's about 80 percent of 2015's total amount. The increase has triggered some concerns about China's capital outflows. However, Catao said that as emerging markets become increasingly mature, more and more companies will want to diversify their assets. 

The IMF report suggested that in the future, emerging markets should be cautious about their macroeconomic policies and develop more flexible policies concerning forex rates. 

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