FOREIGN CAPITAL

FOREIGN CAPITAL Largely as a result of East Asia's currency crisis, private capital flows to emerging markets are expected to decline this year. Net private capital flows will fall to $261 billion from $281 billion in 1996, says the Institute of International Finance (IIF), a group representing financial institutions. The bulk of the decline will be in commercial bank lending. The IIF forecasts that commercial bank loans to emerging economies will drop to $44 billion in 1997, barely half last year's total of $84 billion. Equity investment, however, should remain strong: foreign direct investment is forecast to rise to $95 billion and portfolio investment is expected to increase to $42 billion.