According to the International Monetary Fund (IMF), overall debt levels in Asia have risen dramatically. Inflation fears and a tightening of financial conditions across Asia have led to an increase in debt.
The IMF’s director of Asia and the Pacific said on Wednesday that “if you consider regional debt and share of all debt in Asia, the overall debt has increased quite a lot.”
Debt in Asia has risen from 25% before the COVID-19 outbreak to 38% now, with countries such as Laos, Mongolia, the Maldives, and Papua New Guinea at risk. Sri Lanka has already defaulted on its debt.
Inflation in Laos was 23.6% in June, and the Asian Development Bank (ADB) estimates that annual inflation in Mongolia will reach 12.4% this year.
The Maldives has struggled with high debt for many years, and the debt to gross domestic product (GDP) ratio remains high at around 100% of GDP, despite a decline in the last two years.
However, many countries in the region are heavily indebted. Some of these countries are swamped with debt and there is no way out in sight.