Coming Surge In Emerging-Markets Investments Fuels Fears Of Backlash

Tuesday, January 25, 2011 07:33
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Coming Surge In Emerging-Markets Investments Fuels Fears Of Backlash

A global banking trade group is forecasting a $1 trillion infusion of cash into developing economies during 2011, which could lead governments to hit the brakes too hard.

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The Institute of International Finance predicts expanding economies and low interest rates will boost investment and cash flows to emerging markets worldwide, with most of the funds flowing to Asian and Latin American countries.


To prevent loose monetary policies from overheating fragile economies, governments in some of these countries could use capital controls that may turn the clock back on financial improvements that have taken place in these countries, according to IIF officials quoted in this Wall Street Journal blog.
 

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