Economist articles

A 1.4 trillion dollar question

Capital inflows to the five large deficit EMs surged to US$ 1.4 trillion since 2009. Volatile portfolio and investment flows dominate. Turkey is the most exposed while India is the least vulnerable


A 1.4 trillion dollar questionBrazil, India, Indonesia, Turkey and South Africa are some of the larger deficit emerging markets and have been under pressure since May last year amidst concerns regarding the impact of QE tapering. These economies received capital inflows to the tune of US$1.4 trillion since the global financial crisis (GFC). This is substantially higher that the US$0.9 trillion received during the preceding five years. Volatile portfolio and investment flows dominate, making these economies increasingly exposed to reversals in risk appetite and upside risks to US real yields and the US$.



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