Plunging Oil Prices, Rising Debt Leaves Asia Staring at Deflation: Morgan Stanley

Asia’s rapid accumulation of debt in recent years is holding back central banks from easing monetary policy to fight the risk of deflation, endangering private investment needed to boost faltering growth, according to Morgan Stanley.

Debt to gross domestic product ratio in the region excluding Japan rose to 203 percent in 2013 from 147 percent in 2007, with most of the increase coming from companies, analysts led by Chetan Ahya in Hong Kong wrote in a report yesterday. The ratio is close to or has exceeded 200 percent in seven of 10 nations including China and South Korea, they said.