Kristalina Georgieva, managing director of the International Monetary Fund, highlighted the risks to Asia's economic prospects, urging policymakers to restore their reserves in case of future shocks.
This is reported by Reuters.
Georgieva said the Association of Southeast Asian Nations (ASEAN) economies are a "bright spot" in the global economy, with growth forecast at 5% this year and slowing slightly in 2023.
But she warned that the outlook is "extremely" uncertain and dominated by risks such as the fallout from Russia's war against Ukraine, global financial tightening and China's slowing growth.
"Another urgent global problem is inflation. It is expected that this year in Asia it will average only 4%. But inflationary pressure in the region is growing," Georgieva said.
According to her, it is not known how long this shock will last and whether other shocks may occur. "But we need to restore and maintain buffers and be ready to make full use of our policy toolkit," she said.
China's strict COVID-19 containment measures have weighed on already-slowing global growth, dampening domestic economic activity and disrupting supply chains for manufacturers around the world.
The effects of China's slowdown were particularly painful in Asia, where industrial activity fell across the region in November.
Some developing countries have also been forced to raise interest rates to combat capital outflows caused by higher US interest rates, at the cost of damaging their fragile economies.
The pandemic and the war in Ukraine caused a slowdown in economic growth and a sharp rise in energy prices. The head of the IMF, Kristalina Georgieva, predicts that the situation will only worsen next year.