Downgrades for emerging economies

10/11/2008 11:44:29

Rating agency Fitch has cut its credit outlook for a number of emerging economies in light of their exposure to the global economic crisis.South Korea, Mexico, Russia and South Africa all saw their rating outlooks revised down to "negative" from "stable" by the agency.Credit ratings of Bulgaria, Kazakhstan, Hungary and Romania were also lowered.Major shifts in the world economic outlook pose "significant" challenges for such nations, it said.The changes are part of a review Fitch is conducting of 17 emerging economies.The outlooks for Chile and Malaysia were also downgraded, moving to "stable" from "positive".'Profound shift'David Riley, head of Fitch's global Sovereign Ratings group, said there was less scope for emerging nations to tackle the current financial crisis than developed nations."The profound shift in the global economic and financial outlook pose significant real economy and policy challenges for emerging markets," he said.Fitch said problems in advanced economies "triggered extreme volatility in emerging market asset prices" and prompted "liquidity strains".Emerging markets such as Hungary have been hard hit by the lack of credit available in world markets as banks become more reluctant about lending and investors shy away from riskier investments.Hungary is among those that have recently sought help from the International Monetary Fund.The report comes as global finance heads of the world's 20 major economies meet in Sao Paulo in Brazil, to tackle the financial upheaval.Emerging nations have been looking to increase their role, as part of reforms to tackle the current crisis.