{"id":14384,"date":"2026-04-08T13:13:43","date_gmt":"2026-04-08T10:13:43","guid":{"rendered":""},"modified":"2026-04-08T13:13:43","modified_gmt":"2026-04-08T10:13:43","slug":"imf-warns-emerging-markets-face-rising-volatility-risks-from-non-bank-capital-shifts","status":"publish","type":"post","link":"https:\/\/harici.com.tr\/en\/imf-warns-emerging-markets-face-rising-volatility-risks-from-non-bank-capital-shifts\/","title":{"rendered":"IMF warns emerging markets face rising volatility risks from non-bank capital shifts"},"content":{"rendered":"

The International Monetary Fund (IMF) has warned that emerging markets have become significantly more vulnerable to global shocks, such as the conflict in the Middle East, due to a heightened reliance on volatile capital sources including hedge funds.<\/p>\n

According to an analysis by the Fund reported<\/a><\/span> by the Financial Times, this shift is intensifying pressure on emerging economies. Equity and bond purchases directed toward emerging markets have increased eightfold since the 2008 global financial crisis. Total capital inflows are projected to approach $4 trillion in 2025, with the vast majority consisting of debt obligations.<\/p>\n

IMF data show that emerging market debt held by foreign investors has risen to an average of 15% of gross domestic product (GDP), up from 9% in 2006. Four-fifths of this capital is now supplied by non-bank sources, a share that has doubled over the past two decades.<\/p>\n

“These flows are typically more volatile than bank flows and have become increasingly sensitive to global risk conditions,” the IMF report stated, as cited by the FT. “These risks have come to the fore in the context of the war in the Middle East.”<\/p>\n

The Fund\u2019s warning coincides with a period in which several emerging economies are struggling with the economic fallout of the Middle Eastern conflict. Since the onset of the war, the Egyptian pound has lost approximately 15% of its value against the dollar, as foreign investors withdrew nearly $8 billion in local market debt obligations.<\/p>\n

The IMF emphasized that a sudden contraction in foreign capital could exacerbate external financial pressures, drive up borrowing costs, and trigger sharp currency devaluations. The institution noted that such conditions could lead to financial distress, negatively impacting economic growth.<\/p>\n

The analysis indicates that hedge funds rank among the most unstable sources of capital. Following interest rate hikes in the US in 2022, a 7% jump in the VIX volatility index resulted in a 1.3% decline in the share of emerging market securities within hedge fund portfolios.<\/p>\n

According to IMF estimates, direct lending to companies by non-bank investors has increased fivefold over the past decade, reaching levels between $50 billion and $100 billion.<\/p>\n

In late March, Federal Reserve Chair Jerome Powell, speaking at Harvard University, stated that while current US public debt levels are manageable, federal borrowing projections are a cause for concern.<\/p>\n

Separately, Olivier Blanchard, the former IMF chief economist and head of research, stated on March 13 that oil prices could reach $200 per barrel due to the impact of conflicts in the Middle East.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The International Monetary Fund (IMF) has warned that emerging markets have become significantly more vulnerable to global shocks, such as the conflict in the Middle East, due to a heightened reliance on volatile capital sources including hedge funds. According to an analysis by the Fund reported by the Financial Times, this shift is intensifying pressure […]<\/p>\n","protected":false},"author":1,"featured_media":14385,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[175],"tags":[6760,17765,4944,17766,582,17768,9584,5856,302,1850,17771,6848,916,4338,2796,17767,5945,17770,7485,17769],"class_list":["post-14384","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-diplomacy","tag-borrowing-costs","tag-capital-flows","tag-currency-devaluation","tag-debt-obligations","tag-egypt","tag-egyptian-pound","tag-emerging-markets","tag-federal-reserve","tag-financial-times","tag-gdp","tag-global-financial-stability","tag-hedge-funds","tag-imf","tag-jerome-powell","tag-middle-east-conflict","tag-non-bank-financial-institutions","tag-oil-prices","tag-olivier-blanchard","tag-us-debt","tag-vix-index"],"yoast_head":"\nIMF warns emerging markets face rising volatility risks from non-bank capital shifts - 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