Rising Asia debt levels could temper growth -World Bank chief economist

MARRAKESH, Morocco, Oct 9 (Reuters) – Rising debt levels in Asia’s “apparently healthy” countries are hurting the region’s growth, World Bank chief economist Indermit Gil said in an interview with Reuters on Monday. He said there is a possibility that it will be lower than the current forecast level.

Mr Gill remained critical of the slow pace of debt restructuring under the G20 Common Framework for Debt Restructuring in the poorest countries and said it was important to accelerate the process.

But he said Asia’s alarmingly high debt levels were also a concern, noting that increased government borrowing from domestic markets would limit the level of credit available to private companies, thereby dampening investment. did.

“We have simultaneous problems: too much debt and too little investment,” he said. “A lot of government consumption and private consumption is financed by debt. Not a lot of investment is financed by credit, which is not great.”

He said the result could be “much lower growth” than we expected, but did not provide specific numbers. “So it won’t be a debt crisis situation, just a slowdown in growth. But it’s a serious problem as well. Now we’re talking about a very, very large country.”

Gill declined to give specific examples, but Recent World Bank Reports The average country in South Asia has government debt of around 85% of GDP, higher than other emerging market and developing economies.

According to the report, the region’s debt is rising due to increased government spending, lower domestic revenues and higher debt servicing costs. The report said borrowing costs could rise to unsustainable levels due to a number of factors, including losses at large state-owned banks.

Debt levels also rose east asiasaid Gil. “If you look at the debt numbers[in East Asia]they’re all increasing. China is relatively low, but we know that in China it’s not central government debt that’s the problem, it’s local government debt. ” Corporate and household debt. ”

Mr Gill said he was concerned that the world’s focus on the poorest countries covered by the Common Framework could have unintended consequences for other seemingly healthy countries.

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