Chart 15: Major structural changes are increasing the sensitivity of Capital Flows-at-Risk to push shocks  2006  2018  2030 excluding growth in 2030 including growth in EME external balance EME external balance sheets sheets  -1  -2  Impact of the increasing role of investment funds  -3  Impact of the shift to market-based finance Impact of higher share of FX-denominated debt in EMs Pre-crisis Total  -4 Capital Flows-at-Risk as a % of GDP  Sources: IMF, EPFR, IIF, Bank calculations. Notes: This chart shows estimates and projections for the sensitivity of Capital Flows-at-Risk to negative push shocks at different points in time. The chart is based on separate panel quantile regressions for FDI, banking, market-based finance and investment fund flows. We use the global FCI (push), country-specific FCIs (pull), and the share of NFC debt denominated in foreign currency as regressors. The third bar combines regression results with projections for the composition of flows and the role of FX-denominated debt in 2030, as described below and in footnote 21. The fourth bar also takes into account projected growth in EM’s external balance sheets as described below and in footnote 21. In particular, we estimate that the growing shares of FX-denominated debt, market-based intermediation and, within that, the increasing role of investment funds, have increased the sensitivity of Capital Flows-at-Risk to push factors by 50% since the crisis (second bar, Chart 15) – largely using up the self-insurance purchased by EMEs. Left unattended, these vulnerabilities are likely to grow.
There were few plans for large-scale investment, and they mainly concerned the renewal of modernization of existing equipment. Retail sales contracted in February, after posting a substantial rise in January. Employment levels remained stable in industry, except in the automobile sector, where they declined. The retail and market services sectors showed little change, but employment fell in the building industry. Increasing use was made of flexi-time, annualized working time and part-time working to respond to variations in demand. BIS Review 32/1997