MercoPress. South Atlantic News Agency

Euro crisis: Brazil says capital flight from emerging economies has started

The situation is happening in countries with insufficient international reserves according to Mantega

Members from the Brazilian and Uruguayan governments have warned about the increase of capital flight from emerging countries as the Euro crisis lags in search of a strong decision.

Uruguay’s central banker Mario Bergara speaking in Buenos Aires during a financial forum said that one of the main risks emerging countries face is “risk aversion” which might increase capital flight and the fall of international commodities prices as the Euro situation advances.

“The conclusion is that emerging economies are better prepared to confront external shocks, but risks exist and they are there”, said Bergara at the annual meeting of the Latin American Economic Research Foundation, FIEL in Buenos Aires.

However his peer from Brazil Guido Mantega went further and openly warned about capital flight from the region which is “already here”.

“We are seeing capital flight from emerging countries to the extent that emerging countries might even need resources from the IMF”, said Mantega who nevertheless pointed out that “capital flight is taking place in countries which do not have a high level of international reserves which, he underlined, is not the case of Brazil”.

Mantega added that “we must be alert to this situation because if emerging economies are impacted the international situation will worsen”.

During the Buenos Aires forum it was also revealed that Argentina’s foreign exchange reserves which at on point stood at over 51 billion dollars are “currently for the first time, since November 2009, below 47 billion dollars”.