Globalisation, jolt to commodities, cast shadow on Asian markets: Moody’s

Moody’s Investors Service said globalization trends, commodity shocks, tight finances cast a shadow over emerging markets (EMs) in Asia, which continue to be an important global growth engine.

According to Moody’s, smaller marginal markets in Asia are exposed to financial risks due to slowing capital flows into EMs. In both large and small economies, the socio-political effects of rising costs of necessities such as food are at risk.

Atsi Sheth, managing director of credit strategy and research at Moody’s, recently said at the Emerging Markets Summit Asia 2022, “The key question today is whether aggressive monetary tightening by central banks around the world will reduce inflation without pushing economies into recession.” will decrease.”

Moody’s has a baseline expectation that global growth will slow significantly, but a deep global recession is likely to be avoided.

However, there are risks to this baseline, including an even more severe energy shock in Europe or a sharper-than-expected slowdown in growth in China.

Asia’s EM economies have a record of growing faster on average than other regional counterparts. Moody’s said that over the past few decades, globalization of supply chains and cross-border financial investments have benefited companies in Asia.

Meanwhile, China’s rapid growth had positive implications for Asian EMs.

Now, with increasing globalization risks, slowing growth in China and tighter global financing conditions, maintaining high growth will require new catalysts to fuel investment and productivity-driven growth.

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

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(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is generated automatically from a syndicated feed.)

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