Southeast Asia's Debt Problem Hasn't Gone Away
- Rising debt levels pose threat to economic stability
- Malaysia most exposed because of foreign-currency debt levels
This slow shutter effect photograph shows traders waiting as the Indonesian Stock Exchange closed their trading activities in Jakarta on October 9, 2008. The Indonesian Stock Exchange suspended trading for a second straight day following a drop of more than 10 percent amid a rout in global markets. The exchange suspended trading for only the second time in its history after the main index plunged 10.4 percent. AFP PHOTO/Bay ISMOYO (Photo credit should read BAY ISMOYO/AFP/Getty Images)
Photographer: Bay Ismoyo/AFP via Getty ImagesIn Southeast Asia, original sin hasn’t gone away. Even as the region’s currencies rally, stock markets rise and foreign investors return, a legacy of debt remains one of the biggest threats to economic stability.
Governments and companies in Indonesia, Malaysia and other countries in the region have continued to add to borrowing this year after selling the most amount of dollar bonds in three years in 2015, increasing risks if the U.S. Federal Reserve again lifts interest rates, the dollar rallies and local currencies tank.