THURSDAY, March 28, 2024
nationthailand

Asia-Pacific markets still vulnerable, says Moody’s

Asia-Pacific markets still vulnerable, says Moody’s

Moody’s Investors Services says that many banking systems in Asia Pacific (APAC) are still exposed to elevated levels of private sector leverage, although the buildup of such leverage has slowed.

Moody’s said that leverage levels are high in many markets in APAC because of the unusually long period of low interest rates in the region. Specifically, private sector credit as a percentage of GDP rose in 12 of the 14 major Asian systems over the past decade, led by China, Hong Kong, Singapore, Korea and Vietnam.
“Elevated and rising private leverage represent a negative credit development for the banks, because this situation undermines the resilience of borrowers to economic shocks and constitutes a structural banking system vulnerability,” says Christine Kuo, a Moody’s senior vice president.
Moody’s analysis of leverage hot spots in Asia suggests that risks posed by household credit are more prevalent in Australia, Korea and New Zealand, and also elevated in the emerging economies of Malaysia and Thailand.
Moody’s assessment is based on its analysis of household leverage relative to GDP, per capita income, interest rate levels and trends, and property price developments.
Moody’s report covers 14 APAC economies: Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand and Vietnam.
 

nationthailand