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Xinhua) 19:19, June 13, 2014
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Comments twitter facebook Sina Microblog reddit With global liquidity likely to remain high following the monetary easing by EuropeanCentral Bank (ECB) last week, most Asian economies will see more credit-fuelled growthwhich may lead to higher debt level, said latest analysis.
For the first time, ECB pushed deposit rates into negative territory last week. ECB officialsalso threw in plenty of other goodies, like extra liquidity.
There are already speculations in the market that the ECB may have to pursue outrightquantitative easing like those implemented by the U.S. and Japan in future, given thedismal economic growth in Euro-zone.
While there is fairly little immediate impact on Asian financial markets so far, the prospectof further monetary easing from ECB means liquidity should stay in much abundance,supporting credit-fuelled growth among most Asian economies.
Indeed, a closer look at the credit position of Asian economies reveals that Asian debtshave climbed further recently, underlining the rising credit intensity of economic activitydespite a slowdown in gross domestic product (GDP) growth.
By essentially throwing in any type of debt outstanding, whether issued by thegovernment, firms, or households both external and internal-- HSBC Global Researchfound that total debt as a share of GDP in emerging Asia rose last year to 208 percent from192 percent in 2012. Excluding China, it climbed from 172 percent to 180 percent.
While all the attention is on China at present, total debt-to- GDP ratios are also higher inSingapore, Japan, China's Hong Kong, South Korea, and Malaysia. Since 2008, credit hasgrown especially rapidly relative to GDP in these economies.
As for India, Indonesia, and the Philippines, the aggregate leverage has barely increased,partly reflecting the fact that government debt fell as a share of GDP while private sectorindebtedness rose.
HSBC said that what matters is not just the level of debt but the speed with which itclimbs. Household debt ratios have risen particularly quickly in Singapore, China (from lowlevels), Malaysia, and Thailand.
But HSBC cautioned against reading too much on the high debt-to- GDP ratios of Singaporeand Hong Kong as their numbers may exaggerate the debt held by residents due to theirstatus as regional financial centers.
Hong Kong banks, for example, have sharply raised their lending to Chinese firms in recentyears, yet it is difficult to strip out exposure to non-residents on a consistent basis.
Still, the rising credit intensity of GDP growth is not desirable and sustainable in the longrun. While the rise in credit is relatively easy to finance for now, given that global interestrates are near record lows, the region will have to wean itself from its addiction to debt atsome point in future.
Even if Asian central banks are now in no mood to tighten aggressively, with some such asChina's central bank instead relaxing its grip gently to keep credit conditionsaccommodative enough to keep the economy ticking along, they have to realize that growthcannot be sustained simply by expanding credit, the HSBC said.
(Editor:Wu Yanping、Gao Yinan)
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