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IMF's Gita Gopinath Breaks Down Global Capital Flow Trends | Here's What She Said
Gita Gopinath, IMF's First Deputy Managing Director, addressed global capital flow dynamics, highlighting the US as a major destination. While US inflows surged to 33 per cent, emerging markets saw a decline to 20 per cent. Gopinath cited higher interest rates in advanced economies as a key factor and urged investment in local financial markets for growth.
Gita Gopinath Unveils Trends in Global Capital Flows (Image Source: Twitter, iStockphoto)
Gita Gopinath, First Deputy Managing Director of the International Monetary Fund (IMF) shed light on the intricate dynamics of global capital flows. She shared the video on X and discussed the topic of 'Global capital flows: where is the money going?'
She said, "At the IMF meetings, we are discussing global capital flows, where is the money going, one popular destination for the capital flows is US, 33 per cent of the global flows are going to US, as compared to 18 per cent before the pandemic."
Capital Flow Trends: Gopinath mentioned that the United States has emerged as a dominant recipient of global capital flows, with a staggering 33 per cent share. This marks a significant uptick from the pre-pandemic level of 18 per cent. Meanwhile, emerging markets have witnessed a decline in their share, dropping from 25 per cent to 20 per cent.
Reasons Behind the Shift: One notable factor contributing to this shift is the allure of higher interest rates in advanced economies, termed as "higher for longer rates". This trend has diverted capital flows towards these economies, thereby impacting emerging markets.
Resilience of Emerging Markets: Despite the challenges posed by weakened capital flows, Gopinath commended the resilience exhibited by emerging markets. This resilience can be attributed to the robust macroeconomic and financial policy frameworks that have been fortified over the past two decades.
Call to Action: Emphasising the need for continued investment, Gopinath urged stakeholders to prioritize the strengthening and expansion of local financial markets. Additionally, she stressed the importance of fostering growth through strategic investments.
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