Debt of the Non-Financial Sector and Economic Instability in Asia

The article examines the situation in the area of debt of the non-financial sector in Asia. According to the main indicators, it occupies a leading place among developing economies. The author aims to prove the possibility of increasing instability in the development of the non-financial sector with a further uptick in the debt of Asian countries. The work determines the place of Asia in the global debt of the non-financial sector, the degree of its external and internal debt dependence, conducts a comparative analysis by region and country, gives the ratio of various groups of debt and evaluates the prospects for its prolongation. Among the main risk groups posed by the formation of non-financial sector debt are corporate and household debts. It is emphasized that the period of declining economic growth and, accordingly, falling incomes weakens the resilience of Asian companies to financial shocks. The post-pandemic stage, which starts around 2022, is highlighted as the most difficult for the economies of Asian countries, as the vulnerability of companies, especially small and medium-sized businesses, increases. Government support programs are weakened as a result of deficit financing and are unable to provide guarantees on debts, a significant part of which is external. High growth rates of household debt for both mortgages and consumer loans in a number of Asian countries, exceeding GDP growth rates, also raise the uncertainty of economic forecasts. The recovery from the recession that accompanied the coronavirus pandemic is significantly delayed, which creates new, more difficult conditions for the activities of states and companies. The 2019–2022 recession fragmented the regional economy due to trade, investment and financial restrictions and different approaches to economic policies implemented by each country, which will require significant efforts to restore the financial integration of the region and usher in a new stage.

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