Economists said that Europe, the United States and China’s economy is slowing down, gradually decreasing

On March 17, 2020, a stock price screen outside a brokerage company in Tokyo, Japan, reflected passers-by wearing protective masks after the outbreak of the coronavirus disease (COVID-19).

Kato Issei | Reuters

Carlos Casanova, senior economist for Asia at UBP, a Swiss private bank, said that Asian countries will face three headwinds in the coming year.

“We have more and more omicron cases. We have priced China’s growth slowdown at around 5%. Now, the minutes of the Fed meeting show that the pace of reduction will be faster than expected,” he told CNBC. On Friday, it was added that these factors “posed a threat to the entire region.”

U.S. Central Bank Frightened investors A few minutes passed last week December meeting The member who sent the signal is ready Tighten monetary policy more aggressively Better than previously expected.

This U.S. Federal Reserve Said that it may be ready to start raising interest rates, cancel its bond purchase plan, and hold high-level discussions on reducing the holdings of U.S. Treasury bonds and mortgage-backed securities.

Casanova pointed out that although Asia’s emerging markets are in a favorable position, they will be more affected by these factors—especially if the Fed takes active actions in policy.

“There will be real interest rate compression between emerging markets in Asia and the United States,” he said. He added that this could lead to further outflows of bonds from the region, especially bonds from more vulnerable economies.

In 2013, the Fed triggered the so-called “loose the temperWhen it began to scale back its asset purchase plan, investors panicked and triggered bond sell-offs, leading to soaring Treasury bond yields.

Affected by this, the emergence of capital outflows and currency devaluations in emerging Asian markets has forced the central bank of the region to raise interest rates to protect their capital accounts.

Casanova said it all depends on how the Fed normalizes its policies in the coming months.

He pointed out: “We are trying to avoid a situation where they are implementing three interest rate hikes in 2022 while more aggressively reducing their balance sheets,” he said, which may translate into further capital outflows. Regional and deflationary pressures.