IMF Says Mideast Markets Twice as Sensitive to Global Risk as EM - Bloomberg

IMF Says Mideast Markets Twice as Sensitive to Global Risk as EM - Bloomberg:

Markets in the Middle East and Central Asia may have more to lose from a shift in global risk sentiment than other developing nations, according to an International Monetary Fund report highlighting the region’s increased reliance on hot money. 


Capital inflows into the region have almost doubled over the last decade, as governments grappling with low oil prices rushed to bond markets to finance their budget and current-account deficits. Long-term foreign direct investment, on the other hand, has dropped almost by half.

While the funds provided some governments the means to plug deficits relatively cheaply, “lower government and corporate transparency” make them twice as sensitive to changes in risk appetite than inflows into other emerging markets, the IMF said.