Emerging markets in Asia are in a stronger position than their peers elsewhere because of solid economic growth prospects, low inflation and strong reserve buffers, said Singapore's central bank chief.

While the region's developing economies will not be spared from the market turmoil that has hit countries from Argentina to Turkey, once the "adjustment has run its course", investors will be better able to discern that countries like Indonesia have taken the right steps in response, Monetary Authority of Singapore managing director Ravi Menon said at a panel discussion at a Milken Institute conference yesterday.

"Asian emerging markets are in a better place than emerging markets elsewhere," he said. "It goes back to fundamentals. Growth is good, inflation is low, buffers are strong."

Indonesia has been one of the hardest hit in Asia from the global market rout, with deficits on both its current account and budget making the economy reliant on foreign investment and vulnerable to outflows. Its currency has slumped more than 8 per cent against the US dollar this year to its lowest level since the Asian financial crisis two decades ago.

Indonesia's central bank has raised interest rates four times since May to boost the rupiah, while the government is curbing imports to help narrow the trade gap.

Mr Menon said Asia's underlying growth story remains intact despite global risks from trade wars and rising interest rates. A growing middle class, urbanisation and the integration of markets to allow for more trade will continue to underpin the region's growth prospects, he said.

If the United States follows through with additional tariffs on China, that would cause a 0.5 percentage point loss to gross domestic product growth for both countries, Mr Menon said. "That will sweep down the supply chains across Asia and shave off growth in many of these small open economies in Asia," he said. "Things could get a lot worse from this point on, but that remains a tail risk for now."

Mr Menon said the correct response to a unilateral hike in tariffs was not to retaliate, but to step up trade with other countries.

"If retaliation goes on in a series of tit-for-tat moves, the impact will be bigger," he said. "So what I'm suggesting is you can actually stop it by not retaliating."

BLOOMBERG