According to The, Federal Reserve’s aggressive move to raise interest rate and tighten policies will not help the recovery of Asia’s economy. International Monetary Fund.

The current account surplus and the level of reserves are much higher among Asian countries this time compared to 2013 during the so-called “taper tantrum,” said Changyong Rhee, director of the Asia and Pacific department at the IMF.

But he cautioned that the greater debt burden in the region is problematic.

The global financial crisis caused a large increase in the amount of debt. Asia represented 27% global debt around 2007. Now in 2021, Asia accounted for  almost 40% of global debt,” he told CNBC’s “Squawk Box Asia” on Wednesday.

In 2013, the Fed triggered a “taper tantrum” when it began to wind down its asset purchase program. It caused panic among investors and a surge in Treasury yields.

As a result emerging markets in Asia experienced drastic capital outflows and currency appreciation, which forced central banks to increase interest rates to safeguard their capital accounts.

Rhee stated that although the Fed’s interest rates are not expected to cause major shocks in the financial sector, it could “definitely slow down Asia’s growth and recovery.”

His comments come ahead of the Fed’s policy statement later on Wednesday, where it’s expected to signal a rate hike as soon as March and indicate more policy tightening on the table to tamp down inflation.

Asia is very heterogeneous. Singapore, [South]Korea and many other Asian countries have already seen higher inflation and a smaller output gap. “So the central banks need to act quickly like Singapore did this week,” said he. Singapore’s central bank decision on Tuesday to tighten monetary policyOver inflationary concerns

The output gap is the difference in output between what the economy actually produces and the output it can generate at its full potential.

However, other Asian countries still have a large output gap because of the Covid-19 Delta outbreak that occurred last year. Rhee said that it had impeded their recovery.

High interest rates in America will cause them to respond to the US monetary policy. He said that they are currently performing a very delicate balancing act.

Tuesday will be the IMF slashed its global growth forecast for 2022 due to concerns over increasing Covid cases, supply chain disruptions and higher inflation.

It expects global gross domestic product to weaken from 5.9% in 2021 to 4.4% in 2022 — lowering this year’s figure by half a percentage point compared to previous estimates.

China’s growth this year is now expected to come in at just 4.8% — down from an earlier estimate at 5.6%, based on IMF’s forecast. 

China last week reported its reorganization. economy grew by 8.1% in 2021Data from the National Bureau of Statistics shows that GDP rose 4% in the fourth quarter compared with a year ago. Analysts expected a faster increase in GDP for the fourth quarter of 2014, which was 4% higher than what actually happened.

Recent statements by the IMF China’s zero-Covid policy It is viewed as a burden, which hinders economic recovery in the country and around the globe.

The pandemic started in 2020 and has continued to this day. China’s strict policy means mass quarantines and lockdowns, as well as widespread travel restrictions — whether within a city or with other countries — are used to control outbreaks. 

Rhee stated that China’s ability to grow at 4.8% or higher growth rates depends on these two factors.

“One is dynamics of Omicron, and future dynamics for this pandemic,” he stated. This is difficult to predict. 

They can use more fiscal resources,” he said. China’s growth rate depends on how they use fiscal resources,” he said.

— CNBC’s Karen Gilchrist contributed to this report.