Encouraged by growth prospects and easy liquidity conditions, private investors are expected to pump in a staggering USD 1.11 trillion into emerging markets, including India, this year, says a report.
According to the report by Institute of International Finance (IIF), private capital flows to emerging economies would rise to USD 1.118 trillion in 2013 from an estimated USD 1.10 trillion in 2012.
"Private capital flows to emerging economies have revived strongly, supported by a generally more risk-friendly attitude of investors since mid-2012. The macroeconomic backdrop remains unusually favourable for private capital flows to emerging economies," the report said.
"On the one hand, very easy monetary policy in mature economies and the prospect of poor returns is "pushing" money out of those markets. On the other hand, higher growth in emerging economies, combined with higher interest rates is "pulling" funds in," it added.
Besides, the report said that the flows to rise further in 2014 to USD 1.15 trillion.
"We estimate that overall inflows in 2012 were slightly lower than in 2011, despite a strong pick-up in momentum in 2012 H2, partly driven by the unfolding dramas in the Euro Area (where stresses peaked in late July)," the report said.
The report said capital flows to Latin America and emerging Asian economies are now 30 percent above the level in 2007, before the global financial turmoil.
The IIF is the international lobbying group for financial firms, with more than 450 members.