Asia's role as the world's growth engine is waning as economies across the region weaken and investors pull out billions of dollars.

The Indian rupee fell to a record low yesterday, Thailand is in recession, and Indonesia's widest current-account deficit pushed the rupiah to the lowest level since 2009. Chinese banks' bad loans are rising, and economists forecast Malaysia will post its second straight quarter of sub-5 percent growth this week.

The clouds forming in Asia, as liquidity tightens and China's slowdown curbs demand for commodities and goods, are fueling a selloff of emerging-market stocks, reversing a flow of money into the region in favor of nascent recoveries in the U.S. and Europe. Emerging markets from Brazil to Indonesia have raised borrowing costs in 2013 to try to aid their currencies as the prospect of reduced U.S. monetary stimulus curbs demand for assets in developing nations.