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Chart of the Day: See the staggering surge in Singapore's leverage level
Debt burdens have risen across the region.
Loose monetary policy and a surge in capital has resulted in an increase in Singapore's debt burden.
This chart from Deutsche Bank shows that debt burdens have risen from less than 240% of GDP in 2009, to 265% in 2015. As a result, Singapore's leverage level is already among the highest in the region.
"Singapore’s debt pressure points stem from elevated corporate and household leverage. Public sector debt, on the other hand, is backed by assets.While debt servicing capacity also remains high for households and corporates, the elevated levels of private sector leverage nonetheless call for caution," Deutsche Bank noted.
The report warned that a weaker SGD and higher interest rates could increase the debt burden, which in turn could impact firms' capital expenditure plans and consumer spending.
“The heavy debt burden also stands to make the economy more vulnerable to adverse income shocks, such as a slowdown in economic activity which could lead to retrenchments or a drop in property prices,” Deutsche Bank said.
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