Private sector investments in emerging markets, including India, is projected to touch a whopping $825 billion, mainly spurred by strong growth in developing countries, says a report.
“Net private capital flows to emerging economies are projected to be $825 billion in 2010, up from $581 billion in 2009 and the April forecast of $709 billion,” the Institute of International Finance (IIF) has said.
IIF, a grouping of financial institutions worldwide, has estimated that private sector investments into emerging markets in 2011 would touch $833 billion.
“Flows (are) promoted by continued strength in emerging market fundamentals and weakness in mature markets,” it added.
The projections exclude sovereign investments, such as those made by governments.
According to the report, a key driver for the robust investment flow is the likelihood of having low interest regime in developed economies for an extended period.
Unlike the mature countries such as the U.S., emerging economies, including India and China, are seeing good growth.
IIF pointed out that higher interest rates in some key emerging economies (Brazil and India) and strong growth, among others, would boost the investment flow. Out of the total private capital inflows expected this year, “portfolio equity investment by non-residents into emerging countries” is expected to be $186 billion in 2010.
The amount stood at an annual average of $62 billion in 2005-09 and higher by $94 billion from IIF's April estimate.
On the other hand, net credit flows from banks are projected to be $85 billion in 2010, which compares to an annual average of $172 billion in 2005-09, the report added.