Carlos Casanova, economist at UBP, said there are three main risks facing Asian economies in 2022.
"The data indicate an increase in cases of the Omicron strain. We also forecast a slowdown in China's GDP growth - to about 5%. Meanwhile, the minutes of the Fed's December meeting signaled a faster pace of asset purchases reduction than expected," he said, adding that these factors "pose a threat to the region as a whole."
The minutes of the Fed meeting noted that Fed policymakers experienced increased discomfort due to the high level of inflation. The minutes indicated growing concern that the persistence of high inflation could push the central bank to more aggressive measures, especially if companies and consumers expect continued rapid price increases.
Casanova noted that in case of more hawkish actions by the Fed, emerging markets in Asia may come under pressure, although they are currently in a good position. He added that the Fed's actions could cause an outflow of bonds in the region, especially from countries with more vulnerable economies.