Latest news with #householddebt
Malay Mail
a day ago
- Business
- Malay Mail
Household debt at 84.3pc of GDP, but Malaysians still have a strong buffer, says Finance Ministry
KUALA LUMPUR, July 29 — Malaysia's household debt stood at RM1.65 trillion as of the end of March 2025, equivalent to 84.3 per cent of the nation's gross domestic product (GDP). However, Deputy Finance Minister Lim Hui Ying highlighted that the value of household financial assets exceeds the total debt, indicating that the public's overall financial position remains strong. 'Household debt should be viewed alongside household financial assets, which are significantly larger. 'On aggregate, household financial assets continue to exceed debt by 2.1 times, providing a solid buffer for households,' she told the Dewan Rakyat today. Lim was responding to a supplementary question from Datuk Awang Hashim (PN-Pendang), who inquired about the debt-to-GDP ratio. She said that regarding household debt, the government and Bank Negara Malaysia are always committed to assisting credit users who face financial difficulties. In response to the original question posed by Datuk Mohd Shahar Abdullah (BN-Paya Besar), who asked whether the government has regulatory plans for credit services to ensure stronger consumer protection, Lim said that loans approved by financial institutions are subject to the Policy Document on Responsible Financing. This document was issued by Bank Negara Malaysia (BNM) and has been in effect since 2012. Lim explained that through the implementation of this policy document, the debt service ratio (DSR) for households remains within prudent levels, with the median DSR for outstanding loans at 34 per cent, while the median DSR for newly approved loans is 41 per cent in 2024. 'The DSR maintained within these prudent levels serves as an adequate buffer for households to meet their debt obligations,' she said. Meanwhile, Lim said that the Credit Counselling and Management Agency (AKPK) also provides advisory services and assistance in financial management and loan restructuring. The deputy minister added that AKPK has successfully helped more than 64,000 borrowers fully settle their loans through its Debt Management Programme, while nearly 270,000 participants remain actively engaged in their financial recovery journeys under this programme. — Bernama
Malay Mail
a day ago
- Business
- Malay Mail
BMI: High household debt putting a damper on Malaysian consumer spending
KUALA LUMPUR, July 29 — High household debt levels remain a significant constraint on Malaysia's consumer spending despite an otherwise positive economic outlook, according to a new BMI report. According to the Fitch Solutions firm, household debt reached 69.5 per cent of GDP in the fourth quarter of 2024, up slightly from 69.3 per cent in the previous quarter, based on Bank Negara Malaysia data. 'A high level of household debt remains a risk to our consumer outlook, as it not only constrains future borrowing capacity but impacts current disposable income levels,' BMI said in the report. High debt servicing costs are eating into household spending power even as the central bank begins to ease monetary policy, BMI analysts warned. Consumer confidence has weakened significantly, with the Malaysian Institute of Economic Research recording an average of 87.1 in the first quarter of 2024, down from 89.4 in the fourth quarter of 2023. This represents one of the lowest consumer confidence readings since the second quarter of 2022, when it reached 85.9, compared to a long-term average of 96.5 between 2005 and 2023, the report noted. Retail sales growth has shown signs of softening, coming in at 4.9 per cent year-on-year in May 2025, up from 4.7 per cent in April but marking a notable decline from earlier in the year. Inflationary pressures in essential commodities such as food and fuel continue to weigh particularly heavily on low- and middle-income households, BMI said. People walk in a shopping mall in Kuala Lumpur on August 7, 2024. — Picture by Firdaus Latif Food price inflation, while moderating to 2.1 per cent in June 2025 from an average of 2.5 per cent in the fourth quarter of 2024, remains a key risk factor for consumer spending. The research firm noted that debt servicing costs could rise again if inflationary pressures accelerate and force the central bank to return to interest rate hikes. Malaysian consumers remain exposed to global economic risks including supply chain disruptions, trade tensions, and geopolitical conflicts that could impact purchasing power. Rising political risks associated with inflation and debt servicing costs could complicate policymaking and further strain the consumer sector, analysts warned. Global supply chain disruptions due to conflicts and longer shipping routes are leading to higher prices and product availability issues that force consumers toward more expensive alternatives. Trade barriers and retaliatory measures, particularly involving China, Europe, and the US, are expected to inflate costs and strain supply chains further. A potential deep recession in the US could spread to other economies and significantly impact global consumer markets, including Malaysia, BMI cautioned. Despite these challenges, the firm maintained its forecast for consumer spending growth of 3.8 per cent in 2025 and 5.0 per cent in 2026, supported by wage gains and monetary easing.
Bloomberg
22-07-2025
- Business
- Bloomberg
Thailand's Tourism Slump and Household Debt Weigh on Its Lenders
Thailand's banks are grappling with weak lending amid high household debt, slowing tourism and sluggish consumer spending that risk dampening their outlook for the rest of the year. The banks are facing lackluster earnings tied to lower net interest margins — the difference between interest income and paid interest — and muted loan growth as the country endures economic uncertainties, according to a note from Citi Research.
Malay Mail
20-07-2025
- Business
- Malay Mail
Ballooning household debt in South-east Asia: The deindustrialisation trap in Malaysia — Phar Kim Beng and John Yip
JULY 20 — Rising household debt has become a defining feature of South-east Asia's economic landscape, and nowhere is this more acute than in Malaysia. Once an exemplar of export-driven modernisation, Malaysia now finds the foundation of its prosperity under strain. At the heart of this vulnerability sits a structural transition—from industrial production to consumption-led services—leaving many households with unstable incomes and a mounting reliance on borrowing. Left unchecked, this accelerating debt burden risks stalling broader development and undermining social cohesion The Alarming Numbers The scope of the problem is stark. This loss of stable, well-paying industrial work has coincided with aggressive consumer lending and a rapid normalisation of debt-driven consumption. — Bernama pic By the end of 2021, Malaysia's household debt-to-GDP ratio stood at 89 per cent, the second-highest in South-east Asia—surpassed only by Thailand (89.3 per cent) and far exceeding Singapore (69.7 per cent), Indonesia (17.2 per cent), and the Philippines (9.9 per cent). This means Malaysians shoulder nearly RM1.4 trillion in household debt, with the highest portion in mortgage and car loans (58 per cent and 13 per cent, respectively), followed by personal loans (14 per cent) and credit cards (3 per cent). Why are Malaysian households so leveraged? Structural change, rising living costs, and the ease of consumer credit all play a role. Responsible lending has helped contain system-wide risk, but a large group of over-indebted households—particularly those with high Debt Service Ratios (DSRs)—remains deeply vulnerable. Under stress scenarios, high-DSR borrowers (DSR > 60 per cent) are 5.5 times more likely to default and face financial hardship than those with more prudent debt loads. Why has household debt swelled? 1. The deindustrialisation challenge Malaysia, alongside its neighbours, was once a manufacturing powerhouse, providing stable jobs and income growth for its rising middle class. However, since the 2000s, manufacturing's share of output has steadily declined (from over 30 per cent to below 24 per cent as of 2023). The expansion of the service sector has yet to compensate in terms of job quality or security. As highlighted by the World Bank and others, the shift away from industry has produced only limited increases in high-productivity service sector employment, with many workers landing in unstable, low-wage, or informal jobs. 2. Overconsumption and easy credit This loss of stable, well-paying industrial work has coincided with aggressive consumer lending and a rapid normalisation of debt-driven consumption. Social status and aspirations are increasingly tied to visible consumption—cars, electronics, travel—even as income gains have slowed. As a result, Malaysians have resorted to credit: the ratio of household debt to GDP has remained stubbornly high, and many families borrow simply to make ends meet, not just to invest in property or education. High household debt poses a profound danger to both individual livelihoods and the broader national economy. When families become overleveraged, a significant portion of their income is redirected to servicing debt, leaving little room for savings, consumption, or investment in education, healthcare, and long-term security. This weakens domestic demand, especially in emerging economies like those in Asean, where consumption is increasingly vital to growth. Over time, households may become vulnerable to interest rate hikes or sudden job losses, which can trigger a cascade of defaults. This, in turn, affects banks' balance sheets and credit availability—creating a vicious cycle of financial distress and economic contraction. High levels of debt also lead to greater social stress, contributing to mental health challenges, rising family disputes, and increased vulnerability to scams, as desperate individuals may seek quick fixes to financial burdens. In the digital age, cybercriminals exploit this desperation, drawing victims into fraudulent investment schemes or illegal lending traps. Furthermore, high household indebtedness limits the government's ability to stimulate the economy during downturns. When too many citizens are financially fragile, even cash handouts or tax rebates are used to repay debts rather than revive economic activity. Left unchecked, household debt becomes not just a private burden but a public risk. The consequences: Why soaring household debt is dangerous If Malaysia's household debt remains unchecked, what risks emerge? • Financial Instability: A high overall debt load amplifies the risk of loan defaults during downturns or rate hikes. Stress-test results show high-DSR households are especially exposed during economic shocks. • Stagnating Upward Mobility: Heavily indebted families have less ability to save for education, healthcare, or retirement, threatening intergenerational mobility. • Growing Inequality: Debt-servicing requirements hit the less affluent hardest, as wealthier Malaysians benefit from lower interest rates and greater collateral. • Weaker Economic Recovery: With nearly RM1.63 trillion in total household debt in 2024, a large share of income flows to debt repayment, squeezing future consumption and potentially slowing national recovery from economic shocks. • Potential for Social Unrest: Persistent financial distress among large swathes of the population can accelerate social and political dissatisfaction. Responding to the crisis 1. Restore high-quality job growth Stimulate advanced manufacturing, green technology, and high-value services to generate better-paying, more stable jobs. Encourage policies supporting productivity and innovation rather than mere consumption. 2. Promote responsible credit practices Maintain and update lending standards; monitor DSRs rigorously, especially among new borrowers. Improve public awareness of the risks of excessive debt. 3. Strengthen social safety nets and financial literacy Expand targeted welfare and emergency savings supports, especially for high-DSR and low-income households. Continue nationwide financial education to help citizens plan better and understand the long-term costs of debt. 4. Data-Driven Policymaking Use micro-level borrower and sectoral data to tailor macroprudential measures, avoiding 'one size fits all' restrictions that can hurt lower-risk borrowers. Conclusion South-east Asia's, and especially Malaysia's, household debt predicament is not the result of individual irresponsibility alone. It is deeply tied to deindustrialisation, job precarity, and the easy availability of credit—amplified by evolving consumption norms. While prudent lending has insulated the overall financial system thus far, the proliferation of high-DSR borrowers is a warning sign. Bold, targeted action—from rebuilding the foundations of stable employment to stricter but nuanced credit oversight—is crucial to ensure Malaysia's development remains both inclusive and sustainable, rather than an illusion built on borrowed time. *This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
Yahoo
19-07-2025
- Business
- Yahoo
Think the US Is Bad? People in These 9 Countries Have Way More Debt
In the U.S. it's more common than not to carry a boatload of debt. As of the third quarter of 2024, Americans owed $17.57 trillion in total debt — up 2.4% year over year, according to Experian data. Even spread over hundreds of millions of people, it's a lot of debt: $58,215.12 for the average household, according to a new study by QuickLoan Pte Ltd. Check Out: Read Next: But the U.S. isn't the only country with a serious debt issue among its citizens. The study analyzed household debt data across multiple countries to find which nations live most on credit and where debt-to-income ratios pose the greatest financial risks. The U.S. came in 10th, based on loan-to-income ratio, as it has a loan-to-income ratio of 112.21%. Below are the nine countries where the burden of household debt is even greater. 9. Netherlands Average household debt: $53,430.77 Average yearly net salary: $45,433.20 Loan-to-income ratio: 117.60% Learn More: 8. New Zealand Average household debt: $43,987.51 Average yearly net salary: $36,810.84 Loan-to-income ratio: 119.50% 7. Luxembourg Average household debt: $87,235.44 Average yearly net salary: $72,789.24 Loan-to-income ratio: 119.85% 6. Sweden Average household debt: $45,796.27 Average yearly net salary: $37,528.32 Loan-to-income ratio:122.03% 5. Denmark Average household debt: $59,926.00 Average yearly net salary: $47,495.64 Loan-to-income ratio: 126.17% 4. Switzerland Average household debt: $124,785.99 Average yearly net salary: $86,807.04 Loan-to-income ratio: 143.75% 3. Canada Average household debt: $54,572.63 Average yearly net salary: $34,609.56 Loan-to-income ratio: 157.68% 2. Australia Average household debt: $70,348.47 Average yearly net salary: $43,060.44 Loan-to-income ratio: 163.37% 1. Norway Average household debt: $74,629.74 Average yearly net salary: $43,955.28 Loan-to-income ratio: 169.79% More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard Clever Ways To Save Money That Actually Work in 2025 These Cars May Seem Expensive, but They Rarely Need Repairs This article originally appeared on Think the US Is Bad? People in These 9 Countries Have Way More Debt Sign in to access your portfolio
