Report from Property Guru (Malaysia) dated 20 March 2014 :-
Malaysia's Household Debt climbs to the highest in Asia
Driven by a buying spree of houses and cars, Malaysia’s household debt has climbed to 86.8 percent of its gross domestic product (GDP), or the highest in Asia.
“The ratio of household debt-to-GDP is expected to remain elevated over the next few years as demand for credit is likely to remain strong, particularly from the relatively young labour force and more affluent population in urban centres,” said Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz to The Star.
From 2003 to 2013, Malaysia’s household debt has increased by 12.7 percent annually to reach 86.8 percent of GDP, while total household assets has grown at a slower pace of 10.4 percent annually to hit 321.6 percent of GDP by 2013.
Nevertheless, household assets still to surpass debt levels by 3.7 times largely thanks to rising household income, which encouraged asset accumulation.
However, the high household debt is worrying and poses a risk to Malaysia’s economic health. People who may have over-borrowed are also vulnerable to adverse financial shocks.
As such, the central bank will continuously monitor the situation and will implement measures to curb the growth of household debt when necessary. But at present, lending to Malaysian families remains stable despite the high GDP-to-household-debt ratio.
“Household loans from the banking system continue to improve in quality across all loan segments, with delinquencies remaining low and continuing to trend downwards. This has been supported by sustained improvements in the lending and risk management practices of banks,” Zeti added.
Furthermore, the debt servicing capacity of Malaysian families remain intact due to favourable employment and income conditions, while aggregate household borrowings in 2013 grew at its slowest pace of 11.7 percent since 2010.
Image Source: The Aintdaily.com
Farah Wahida, Editor of PropertyGuru, wrote this story. To contact her about this or other stories email farahwahida@propertyguru.com.my
Malaysia's Household Debt climbs to the highest in Asia
Driven by a buying spree of houses and cars, Malaysia’s household debt has climbed to 86.8 percent of its gross domestic product (GDP), or the highest in Asia.
“The ratio of household debt-to-GDP is expected to remain elevated over the next few years as demand for credit is likely to remain strong, particularly from the relatively young labour force and more affluent population in urban centres,” said Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz to The Star.
From 2003 to 2013, Malaysia’s household debt has increased by 12.7 percent annually to reach 86.8 percent of GDP, while total household assets has grown at a slower pace of 10.4 percent annually to hit 321.6 percent of GDP by 2013.
Nevertheless, household assets still to surpass debt levels by 3.7 times largely thanks to rising household income, which encouraged asset accumulation.
However, the high household debt is worrying and poses a risk to Malaysia’s economic health. People who may have over-borrowed are also vulnerable to adverse financial shocks.
As such, the central bank will continuously monitor the situation and will implement measures to curb the growth of household debt when necessary. But at present, lending to Malaysian families remains stable despite the high GDP-to-household-debt ratio.
“Household loans from the banking system continue to improve in quality across all loan segments, with delinquencies remaining low and continuing to trend downwards. This has been supported by sustained improvements in the lending and risk management practices of banks,” Zeti added.
Furthermore, the debt servicing capacity of Malaysian families remain intact due to favourable employment and income conditions, while aggregate household borrowings in 2013 grew at its slowest pace of 11.7 percent since 2010.
Image Source: The Aintdaily.com
Farah Wahida, Editor of PropertyGuru, wrote this story. To contact her about this or other stories email farahwahida@propertyguru.com.my
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