Net private investment in emerging economies is set to slump by $61 billion this year after the terrorist attacks in the United States, the World Bank's Institute of International Finance said Thursday, September 20.
Net private investment flows would fall to about $106 billion this year from $167 billion last year, said the institute, which is charged with promoting investment in developing and emerging economies.
"The decline reflects heightened risk aversion following the terrorist attacks in the United States on September 11 as well as the sharp slowdown in global activity and the impact of earlier crises in Argentina and Turkey," it said in a report.
Private investment would recover to $127 billion next year, as investors moved their money back to Turkey and Argentina, the institute said. "The emerging market economies were facing an already challenging and uncertain external environment before the attacks, which have adversely affected investor and consumer confidence and increased volatility in financial markets," it said.
"They also appear to have significantly increased risk aversion and reduced investor appetite for emerging market assets, although at this stage how strong and lasting the effect will be remains highly uncertain." — (AFP, Washington)
by Allen Nacheman
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)
