Sky-high household debt puts Malaysia’s economic growth at risk
Consumer debt in Malaysia stood at 80.5% of its GDP as of 2012, higher than the government debt level of 53%. June 27, 2013 | Magessan RajAs Malaysia’s economy experienced a boom in recent years, so has the domestic consumer debt levels, as Malaysians find themselves mired in debt. Consumer debt rate in Malaysia, as of end 2012, stood at 80.5% of its GDP ($288 billion as of 2011), higher than the country’s government debt level of 53%. Driven by the demand for credit cards and personal loans, Malaysia’s household debt ratio remains one of the highest in the South East Asia region, with economists warning that growing consumer credit – where each ringgit of growth nearly matched an extra ringgit of consumer debt – could well stunt economic growth in the long term, seeing as to how the lower-income households bear a greater share of the overall debt. Malaysia’s credit card transaction volume grew 2.7% to 325.3m in 2012 Figure 1. Credit cards in Malaysia Please click to view enlarged image
While neighbouring countries such as Thailand, has seen consumer credit growth increase from 16.5% of GDP in 2007 to 25.3% in 2013, Malaysia’s credit debt levels are trickier as household indebtedness increased from 75.8% of GDP in 2010 to 80.5% in 2012. Extravagant expenditures by Malaysia’s civil servants and low-income earners, as well as poor financial planning and management are among issues that need to be addressed. Indeed, the World Bank has scaled back its 2013 growth forecasts for developing East Asia and warned about possible overheating in the region’s larger economies that could stoke inflation and asset bubbles. “More significant th... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Cards, Consumer Finance, Databook, Malaysia, Regulation, Retail Banking, Risk and RegulationCards,Consumer Finance,Databook,Malaysia,riskregulation,retail,Risk and Regulation, Cards,Consumer Finance,Databook,Malaysia,Regulation,Retail Banking,Risk and Regulation, Keywords:World Bank, Bank Negara Malaysia, CIMB, Renzo Viegas, NBFI, Consumer Debt World Bank, Bank Negara Malaysia, CIMB, Renzo Viegas, NBFI, Consumer Debt
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