Rising rates intensify Asean’s debt burdens, but financial crisis remains unlikely

ASEAN economies whose public debt levels rose during the pandemic may feel squeezed by rising interest rates, but they are now more resilient against the risk of a financial crisis compared to the past, say analysts.

While the Asean+3 Macroeconomic Research Office (Amro) “remains wary of risks to the region’s fiscal sustainability”, “a major financial crisis is unlikely at this point”, Amro chief economist Khor Hoe Ee told The Business Times.

“The realisation of a sovereign debt crisis in the Asean+3 region is deemed a tail risk at this juncture,” he added. Asean+3 refers to the 10 Asean member states as well as China, Japan and South Korea.