Investors Withdraw Funds From Developing Countries Asset

The Institute for International Finance (IIF) conducted a research. Its results showed actively withdraw funds from investors from the developing countries asset. This trend has been observed for the first time since March past year. Institute experts noticed that investors do not believe in the recovery of the emerging markets economies in 2022. This will be hampered by new outbreaks of the pandemic, as well as the expected increase in Fed rates. A peak was recorded on the investment volume by non-residents in developing countries securities at the end of last year. Investments have grown this year, but at a slower pace. The IIF report notes that countries such as India, Brazil and South Africa have been actively increasing the volume of borrowings. These funds were needed for supporting the economy. At the same time, the public debt growth in these countries did not have a significant impact on budget indicators. Investors expect the sovereign ratings of some developing countries to be revised downward. The US Federal Reserve’s rate hike will strengthen the dollar, which will put additional pressure on emerging markets. Serving the public debt will become more expensive for them.

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Arseny Kudrin

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