Deglobalisation, commodity shocks cast shadow on Asian markets, says Moody's Investors Service.

Moody's Investors Service, the bond credit rating business of Moody's Corporation, an American business and financial services company said that deglobalisation trends, commodity shocks, and tighter finance have cast a shadow on Asia's emerging markets (EM) which remain an important global growth engine, Business Standard reported.

According to Moody's, as capital flows to EMs had slowed down, smaller frontier markets in Asia are at financing risks. In both larger and smaller economies, the sociopolitical consequences of the rising costs of necessities like food are at risk.

Atsi Sheth, Managing Director, Credit Strategy and Research at Moody's said at the recent Emerging Markets Summit Asia 2022 said, "The key question today is whether aggressive monetary tightening by central banks around the world will bring down inflation without pushing economies into recession."

Asia's EM economies have a record of growing faster on average than other regional peers. Asia's companies have benefited from the globalization of supply chains and cross-border financial investment over the past few decades, Moody's said.

At the same time, China's rapid growth had positive spillovers on emerging markets of Asia.

In the meantime, with deglobalisation risks rising, slowing growth in China, and tighter global financing conditions, maintaining high growth rates will require new catalysts to spur investment and productivity-driven growth.

Asian EMs that are able to generate economic dynamism through public policy or private innovation will likely have an edge over their peers, Moody's said.

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