Markets may be fussing about what the Federal Reserve's next move will mean for Asian economies over the next year, but the region also faces three homegrown issues, Pimco said.
The first issue is whether Abenomics, the economic overhaul introduced by Japanese Prime Minister Shinzo Abe, will continue to support Japan's economy, said Ramin Toloui, Pimco's global co-head of emerging markets portfolio management, in a note. Pimco has $1.97 trillion under management.
He expects the boost from Abenomics will fade, especially once it's confronted by the increase in Japan's value-added tax to 8 percent from 5 percent, which is set for April.
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"Consumption was front-loaded ahead of the tax hike and fiscal stimulus was added, both of which were the key drivers of Japan's gross domestic product (GDP) growth over the last few quarters and will likely contribute much less in 2014," said Tomoya Masanao, Pimco's head of portfolio management in Japan, in the same note.
But he added, Japan's policymakers are likely to be "all-in" on fresh policies if the economy weakens too much, especially with another consumption tax hike set for 2015.
"Growth strategy or a supply-side policy to raise potential growth rates will ultimately be a key for the success of Abenomics, yet it has not been promising," Masanao said.
"The domestic private sector may lose confidence if Prime Minister Abe starts to consume his political capital outside the economic policies," Masanao added.
Opinion polls have found support for Abe has declined to its lowest levels since he took office after his coalition pushed a tough security act through parliament, amid fears it could allow media suppression and hiding official misdeeds, Reuters reported last week.
The second issue
China's progress in reducing its dependence on credit- and investment-led growth is the second concern, Toloui said.
"Chinese economic growth is in the midst of a structural downshift as the export- and investment-led engines that powered 10 percent annualized gross domestic product gains during the past decade have reached their limits," Toloui said.
"Growth in the next decade requires a rebalancing of the economy toward household demand," Toloui added.
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He doesn't expect the reforms announced after the recent Third Party Plenum to be a cyclical game-changer in the near term, with the implementation timeline running through 2020.
"The reform language endorsed in the Plenum is unlikely to be regarded as so ambitious as to warrant a dramatic confidence-induced investment wave in anticipation of the implementation," Toloui said.
"We anticipate an incremental dialing-back of credit stimulus in China but not an abrupt pressing of the brakes," Toloui said.
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The Third issue
The third issue is whether Asia's emerging markets navigate financial volatility without excessive economic disruptions.
"We expect policymakers to face renewed bouts of market stress in places like India and Indonesia," Toloui said.
"The upshot is an Asian outlook in which growth is stabilizing but not stellar," Toloui said. "Prospects for an improved external environment offer the possibility of support on the upside, as countries in the region grapple with domestic challenges."
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1