Asian economies may be booming right now, but inflation is also heating up in the region: food costs are up, as are the prices of gold and oil.
But wages are also going up, and Asian countries, bar Japan, are experiencing a boom in GDP and stock performance.
Bloomberg columnist William Pesek believes that the formation of asset bubbles is a big risk to the region's economy, and that governments must increase efforts against inflation. The issue is especially crucial in developing economies where many families get by on as little as $2 a day and for whom even a small rise in food prices means a big blow to their budgets.
"Expect more tweaks to what economists call 'macro- prudential policies,' including steps to slow the rise of property prices and tighten standards for exposure to foreign currency borrowing," writes Pesek. "Leverage is the real worry here. While everyone agrees too much liquidity is dangerous, the key is locating where those excesses exist. Policy makers should be paying close attention to leverage ratios."