Five Major Economic Risks to Watch for This Year

Developing Asia is poised to grow at 6 percent this year, a slight uptick from the 5.8percentfigure in 2015, but looking ahead, five major economic risks loomon the horizon and the impact of each will be different across countries.

The firstis the future path of interest rates in the United States and the concomitant volatility in financial markets, which could affect regional economies via the trade, capital flow and exchange rate channels. In December, the Federal Reserve raised the Fedfunds target rate by a modest 25 basis points, bringing it to 0.375 percent. While the exact path of U.S. interest rates remains uncertain, the Fed has assured the public that going forward, the tightening cycle will be gradual. Current expectations indicate that the target rate will reach 3.75 percent by the end of 2017.