It predicts developing nations to see $500 billion of foreign direct investment. Portfolio investments will comprise $374 billion and banking-related flows $191 billion.
China will account for just under 40% of all flows, Sergi Lanau, deputy chief economist at the IIF calculated.
"We think EM capital flows in 2021 will not be as strong as late last year," Lanau said in the note.
"Improving EM growth will be a pull factor that attracts flows and so will high commodity prices. However, push factors are more of a mixed bag," he said, adding that strong growth across developed markets was positive though financial conditons appeared less favourable.
Portfolio inflows into emerging markets ex-China slowed to $75 billion in the first three months on this year, compared to $230 billion in the fourth quarter of 2020.
(Reporting by Karin Strohecker; editing by Sujata Rao)
