The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.
CAPITAL MARKETS

Why Latin America is missing out on the inflows

With emerging markets as an asset class hotter than ever, it might be expected that capital flows to them would also be hitting all-time highs. Latin America, however, seems to have been left out of the party somewhat.

With emerging markets as an asset class hotter than ever, it might be expected that capital flows to them would also be hitting all-time highs. That would be the correct view of the aggregate situation: according to the Institute of International Finance, net private capital flows to emerging markets topped $500 billion in 2006 – the second year in succession that has happened. (In 2004, by contrast, those flows were a “mere” $350 billion.)

Latin America, however, seems to have been left out of the party somewhat. The region received net private capital flows of a healthy $71 billion in 2005 but that figure dropped sharply in 2006, to just $46 billion. In view of the fact that the public sector withdrew $20 billion from the region over the course of the year, in the form of repayments to the World Bank, IMF, and Inter-American Development Bank, it’s clear that Latin America’s healthy growth rates are not a result of a massive influx of foreign cash.

Indeed, a great deal of money appears to be flowing out of Latin America, not into it. The Brazilian government alone increased its foreign reserves – that is, purchased foreign securities, mainly Treasury bonds – to the tune of more than $31 billion in 2006, bringing the total to more than $84 billion.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree