Capital Outflow - Economics - The Ukrainian Week

Capital Outflow - Economics - The Ukrainian Week: "Capital travels across the globe in the blink of an eye in pursuit of profit. A country that offers plenty of options for more efficient business or the production of new goods or services is the perfect destination. As soon as new ideas run out and managers relax – which is inevitable sooner or later – capital disappears. Emerging markets are going through this right now. Their economies are slowing down and there is no motive for capital to remain there.

Earlier this month, the business magazine, The Economist, published the Capital-Freeze Index (see The Turkish syndrome). Its 20-point scale assesses the vulnerability of emerging economies to an abrupt halt of capital inflow based on four variables. These including the current account balance, the ratio of short-term external debt and external-debt payments to government reserves, credit growth and the Chinn-Ito measure of financial openness. Ukraine scored 12 points and landed fourth to seventh of 26, together with Brazil, Argentina and Venezuela. Its risk for a sudden stop of external financing is among the highest.

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