Run! The end of the world is...
...actually nowhere near us. Even though many US analysts are predicting doomsday for the global economy
It’s in the air. A worrying sense of terrible deja-vu seems to be hurriedly consuming almost every analyst both sides of the Atlantic, especially in the US. Capital flows to developing countries are again at their high. But the deja-vu, as American analysts seem to be crying hoarse about, relates to the fact that this phenomenon is reminiscent to the capital flow increase of the late 90s, which resulted in the historic credit bubble disaster, which led to the crashing down of South Asian tiger economies that consequently brought the world economy to a grinding halt. Well, to the credit of this suspecting US analysts, it has never been so big, at least not in history. Recording a third straight yearly increase, net private capital inflows to developing economies surged to a staggering $491 billion in 2005 (Global Development Finance Report 2006, World Bank). Net equity flows to these economies have increased from $166 billion in 2002 to $298 billion in 2005. Net FDI inflows have also increased from $160.3 billion in 2002 to $237.5 billion in 2005. This boom, which started in 2002, has brought with it a cumulative capital of $1,316 billion till now.
For more on IIPM Editorial Article, please visit www.iipm.edu/iipm-editorial-183.html
Source: IIPM (Business& Economy), Editor: Arindam Chaudhuri
|
