Capital inflows to emerging market countries will surge yet higher this year as money flowing into China and Brazil more than offsets investors pulling money out of Egypt, according to a group of leading financial institutions.

The Institute of International Finance, a global association of banks and finance houses, on Wednesday said it had revised up its regular estimate of net private capital flows by $81bn for both last year and this, to a total of $990bn in 2010 and $1,041bn in 2011. Inflows to middle income countries had recovered sharply along with the global economy, though the IIF said the rise was likely to slow in coming years.

Jeremy Lawson, the IIF’s deputy director of macro-economic analysis, said: “We expect interest rate differentials with the mature economies will widen in the near term as the emerging markets combat overheating, but then stabilise next year as policy normalisation in the mature economies gathers pace”.