Eurozone Not Preferred for Investments

EuroAs region's Government debt crisis escalates, the euro zone has seen huge net outflows of mutual portfolio and direct investments in March, which has also reflected a pullback by the investors. After the mild net inflows in February, the investments have witnessed net outflows of €37.8 billion, as mentioned in the reports on euro-zone balance of payments.

Totaled over €43.7 billion since November 2005, this time, it has been recorded as the heaviest combined outflow. Whilst, €25.4 billion worth of net outflow has been termed by direct investments, it is €12.4 billion worth by portfolio investments. In addition, the joint net inflow recorded by both has been worth €8.1 billion.

Greece, according to signs in March, is likely to be not able to finance itself in credit markets or convene with its debt payments, which may hoist default qualms and concern the catastrophe that could eventually extend.

The contaminated fears and the current sharp turn down in the euro exchange rate, according to some economists, may point a continued stream of funds out of euro-zone investments since March, but it has been too early to call.

"It was domestic, not foreign capital that was leaving the euro zone in March. Foreign investors probably turned more cautious in April and May”, said Dominique Barbet, Senior Economist at BNP, in Paribas, in concern to the capital outflows.

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