World Bank Backs Efforts to Counter Rapid Inflows |
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January 13, 2011
Emerging market countries should consider all possible means to prevent rapid and volatile capital inflows destabilising their economies, according to the World Bank.
Emerging market countries should consider all possible means to prevent rapid and volatile capital inflows destabilising their economies, according to the World Bank.
In its annual report on the global economy, released on Wednesday the bank also argued that the world economy was already rebalancing faster than many had expected, thanks to rapid domestic demand growth in emerging market countries.
“Our advice is to be as broad as possible in [using] countermeasures,” Hans Timmer, the bank’s director of the report, told the Financial Times. Some countries such as South Africa have mainly used the exchange rate to reduce the inflationary impact of capital flows, but the approach of countries such as Brazil in trying to manage inflows more directly was also legitimate. “It is not just a question of letting the exchange rate appreciate,” Mr Timmer said. Governments can try several measures at once, the report said.
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