Jump in emerging market household debt raises red flags- IIF
LONDON Nov 10 (Reuters) - An estimated $6.2 trillion jump in emerging market household debt should stir regulators into action, given the red flags raised by rising problem loans and slowing economic growth, the Institute of International Finance said in a report.
The IIF estimated that combined global household debt was now more than 44 trillion and that $6.2 trillion of a $7.7 trillion rise in the amount since 2007 - prior to the global financial crisis - was in emerging markets.
That equated to a rise in those regions of more than 120 percent to around $3,000 per adult, according to latest data.
These increases in the context of slowing growth in emerging economies and combined with a sharp rise in corporate debt, has contributed to an increase in the level of problem loans in many EM banks, most notably in Asia, the IIF said.
"With slow growth and deflation risk stalking the global economy, the relatively high level of debt in these countries could become a burden," the report said.
"As such, these situations need to be monitored closely (by authorities and regulators) and addressed."
The three biggest rises in the household debt-to-GDP gap were in Thailand, Malaysia and China.
In China household debt to income levels have risen rapidly in recent years, to nearly 60 percent from 35 percent in 2007.
Virtually 90 percent of Chinese are homeowners - one of the highest rates in the world - and there is a concern that a steep decline in prices could hit the country hard. Continuación...