The View | Why thrifty Asia’s growing appetite for debt could be its undoing, given the lessons from the 1997 financial crisis

Anthony Rowley says rising debt levels around the world, but particularly in Asia, are of concern even though efforts have been made to address the missteps of the past

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A view of the Chao Phraya River seen from a balcony of the unfinished Sathorn Unique building in Bangkok, Thailand, in January 2017. The 49-storey high-rise was supposed to feature luxury condos for hundreds of newly affluent Thai families, but was abandoned when the Asian financial crisis struck in 1997. Photo: AP

Published: 1:15pm, 5 Jun 2018Updated: 10:32pm, 5 Jun 2018

Is Asia even more blind to the risk of debt crises than the rest of the world, which anyway has a poor record on this score? It would appear so as corporate and household debt piles up in the region to record levels that are higher than anywhere else in the world in relation to the size of economies.

The Asian financial crisis of 1997, not to mention smaller events such as Hong Kong’s “deposit-taking company crisis” in the early 1980s and others, should have made Asia ultra sensitive to the danger of debt crises. Instead, there seems to be an unwarranted degree of complacency now that all is well.

Worldwide, debt reached a record US$237 trillion by the end of 2017, according to the Institute of International Finance (IIF). Most of this (US$174 trillion) is in advanced economies but emerging markets have been plunging faster and deeper into debt and certain Asian nations now have the dubious honour of being world leaders in the size of debt relative to GDP.

Tourists view Shanghai’s financial district across the Huangpu River from the Bund. China’s corporate debt has soared to 166 per cent of GDP. Photo: AP

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.css-1m2rp1p{color:#34b8b5;}The View | Why thrifty Asia’s growing appetite for debt could be its undoing, given the lessons from the 1997 financial crisis

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Anthony Rowley says rising debt levels around the world, but particularly in Asia, are of concern even though efforts have been made to address the missteps of the past

The View | Why thrifty Asia’s growing appetite for debt could be its undoing, given the lessons from the 1997 financial crisis

Anthony Rowley says rising debt levels around the world, but particularly in Asia, are of concern even though efforts have been made to address the missteps of the past