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This isn't 1997-98 again – but could it be worse?

Kuala Lumpur, Malaysia
Tom Bonaventure | Photographer's Choice | Getty Images
Kuala Lumpur, Malaysia

The current market rout in emerging Asia isn't another late 1990's-style financial crisis, most analysts agree, but some have larger concerns that the region may have lost its ability to offer investors "catch-up" growth with the developed world.

"This is not 1997, but in many ways the current period is much more insidious and risky," Macquarie said in a report.

Many analysts have dismissed comparisons being made between the recent market turmoil in emerging markets and the Asian financial crisis of 1997-98. They argue that the crisis of the 1990's was triggered by the region's foreign-currency debt, which became too expensive when local currencies collapsed. In contrast, the foreign-currency debt levels in Asia are currently low, Capital Economics said in a note. Other analysts note Asia's financial sector is now better regulated while foreign-exchange reserves are much more substantial.

"(They have) very strong reserves, so they have cushions; better policies; and flexible exchange rates. They have much more self insurance than they did in the '90s. Not for all but for most they do," Pimco's co-CEO Mohamed El-Erian told CNBC on Friday.

(Read more: Emerging markets: dissecting the good from bad)

But even as crisis fears are being dismissed, analysts have flagged concerns about the inability of the region to "catch-up" with their Western peers.

According to Macquarie, most of the region's key growth engines over the last three decades, such as the deregulation of its production, finance and labor markets, have run their courses. The bank forecasts that most emerging markets will likely grow below trend going forward.

Justifying investing in a given emerging market because it has only 10 percent of Western consumption or roads per capita, isn't likely to carry much weight in the future, Macquarie said.

"In the new world, the answer is likely to be that 10 percent of roads per capita is what the country deserves to have, and if it wants more, it needs to justify why there is a need for more roads, consumption et cetera, and would need to compete aggressively for scarce capital," it said.

(Read more: Credit squeeze in Asia now worst since financial crisis)

Macquarie isn't the only one not buying into the catch up story.

"Asean's story definitely has been overhyped. It's fully priced in and it's time to book your profits," Anantha Nageswaran, CEO of consultancy Vansight, told CNBC.

Even the long-held expectation that emerging Asia's growing middle class will keep the consumption engine purring faces skepticism among investors. "People talk about Asian consumption, but we have had that consumption story for the last five years, and now it's peaking out," Julius Baer said in a note.

(Read more: Is a 'flash flood' back into emerging markets next?)

Falling stock markets and the pullback of credit may exacerbate the fall-off in the region's consumption story, with consumers facing a negative wealth effect that will likely slow spending.

In addition, return on equity in Asian companies is in a structural decline, Herald van der Linde, head of Asia-Pacific equity strategy at HSBC, said in a recent report, citing expectations of slower growth that will hurt earnings and structural reforms that will open up markets to more competition.

He also forecast the region's weakening currencies will increase the cost of doing business, as well as make servicing foreign-denominated debt more expensive. "This requires valuations to compress in the coming years," van der Linde said.

(Read more: Are emerging markets facing an 'abyss'?)

To be sure, not everyone agrees. "The determinates of catch-up growth are basically how far behind you are," said Tim Condon, head of research at ING. "As long as macro policy makers can maintain macro stability, then I think there's no reason to think the Asian economies can't continue to grow rapidly."

But even Condon doesn't paint the region with a broad brush. "It's not one size fits all," he said, noting some economies, such as Indonesia and the Philippines are continuing to see growth, while others appear to have had a permanent slowdown since the global financial crisis.

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