Worries over Worsening Credit Rating for Emerging Markets

The economic slowdown and the U.S. terrorist attacks have caused analysts to predict lower credit ratings for emerging markets in Asia and Latin America and contracting foreign capital flow.

The British credit assessment organization Pitch IBCA stated in its `2001 Fall National Credit Rating Investigation Report` that ``It is hard to expect the US-led global economic recovery to happen by next year. There is a high possibility that nations with emerging markets will experience falling national credit ratings.``

``If the exports of newly industrialized Asian nations whose economy has improved through trade continues to weaken for a long-term period, credit ratings in both commercial and pubic sectors are bound to worsen.`` added the report.

The Institute of International Finance, the international commercial finance organization formed by banks from various nations issued a report called, `Mobilizing Capital into Emerging Market Nations` which warned ``Capital flow into emerging markets fell drastically after the US terrorist attacks. This may lead to the worst economic situation since the 1980s.`` The IIF predicted that commercial investment in emerging markets this year will end at 106 billion dollars, 61 billion dollars (36.5 percent) less than last year, and next year`s capital inflow will end at 127 billion dollars.

The reports examines nations who are quickly growing in the financial market, particularly capital investments. Many of these nations are Asian and Latin American countries, including Korea.

Park Joong-Hyun sanjuck@donga.com