India is the only country in the Asia-Pacific region expected to see an increase in net lending this year, as investment demand and external trade activity remain strong, IIF said.
Asia is projected to remain the main destination for investors in 2005, IIF said.
Net flows to emerging economies rose by one-third in 2004 to $279 billion and are projected to fall only slightly to $276 billion in 2005, says IIF.
The level in 2004 was the highest since 1997 and more than twice the level of 2002, IIF said in a release. IIF is a global association of big banks and other financial service institutions.
The increase in 2004 was registered in all areas of private capital including long-term direct investment, bonds, portfolio equity and commercial bank lending, William Rhodes, IIF vice chairman, said on .
He said that the increase reflected growing investor confidence in the performance of major emerging market economies such as Brazil, Mexico and Turkey.
The institute said that net repayments to official creditors from emerging market economies are projected to rise from $18.5 billion in 2004 to $35 billion in 2005.
Major risks are a possibility of higher-than-expected increases in US interest rates, disruptive foreign exchange fluctuations, concerns about global financial imbalances that may discourage higher-risk investment, and geopolitical risks, the IIF said.
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