Emerging economies are at risk of capital flight at levels unseen since the financial crisis and markets are "complacent” about financial conditions, according to the global lender of last resort.

Developing markets, including Turkey, Argentina and several Asian countries, are at risk of a sudden drop off in foreign investor confidence. This could trigger so-called capital flight, where assets from these markets are suddenly abandoned. 

This could total $100bn or more and be “similar in magnitude to the global financial crisis”, the International Monetary Fund (IMF) said in its Global Financial Stability report.

The current probability that funds would flow out of developing countries this quickly was one in twenty, the IMF said. However, the lender also warned that the global economic climate was worsening and that this risk could rise rapidly.

Markets were “complacent about the risk of a sharp tightening of global financial conditions”, the IMF said.

It comes after escalating trade tensions caused the fund to downgrade expectations for global growth by 0.2 percentage points to 3.7pc in 2018 and 2019.

Investment in emerging markets, as opposed to more developed economies, is generally associated with a higher level of risk. This is because both governments and companies in these markets often have a higher chance of defaulting on loan repayments. As a result, when fear of a downturn spreads, many investors de-risk by moving their money to safe havens, such as US treasuries.

Factors such as a sudden simultaneous snap back to higher interest rates in developed economies could also exacerbate the issues faced by these economies and make their assets less attractive to investors. The trade war between the world’s largest economies, the US and China and a no-deal Brexit could also trigger a “spike in risk aversion”, the IMF said.

The assessment comes after the Bank of England warned that an estimated £41 trillion of derivatives face legal uncertainty after Brexit on March 29, unless the EU takes action to ensure continuity of existing rules.

The UK is passing legislation through Parliament to allow EU-based providers of insurance policies and centrally cleared derivatives to continue to service their UK customers.

But the EU has yet to take similar action.

Rising US interest rates and a stronger dollar have already sparked considerable outflows of money from some emerging markets, particularly in Turkey and Argentina which both have high levels of public debt. This debt is often denominated in dollars, meaning stronger US currency makes it more expensive to make repayments.