Predictions

2018 Economic Outlook Vol.2

Bracing for a Minsky moment: Being aware of what could go wrong in 2018

In 2017, 20 years after the 1997 Asian financial crisis, Asian countries enjoyed stronger than expected economic growth despite concerns of another financial crisis occurring within a 10 year cycle.

Bracing for a Minsky moment: Being aware of what could go wrong in 2018

Tsuyoshi Oyama (Partner/Head of Center for Risk Management Strategy (CRMS) / Deloitte Asia Pacific Risk and Capital Management Leader)

 

Introduction

In 2017, 20 years after the 1997 Asian financial crisis, Asian countries enjoyed stronger than expected economic growth despite concerns of another financial crisis occurring within a 10 year cycle. The Chinese economy continued to see growth with only gradual deceleration. This, together with a strong US economy, helped other Asian countries see robust economic performance and continued capital inflows. In particular Korea, Taiwan, and many SEA countries recorded a strong uptick in exports, further bolstering their growth. Even Japan, which has long been struggling with an anaemic low growth rate, looked as though its economy had revived and had finally exited deflation.


All these seemingly healthy economic conditions, however, critically depend on extra-ordinarily loose monetary and fiscal conditions in Asian and other major countries. For example, the debt to GDP ratios and debt service ratios of some Asian countries rapidly increased after the last global financial crisis. Now, they have reached heights that outstrip their peers in other regions. This is particularly true of China but this trend has also presented itself in other countries including Australia and Korea... (download full article)

(PDF, 631KB)

Contact Center of Risk Management Strategy (CRMS)

To subscribe to our monthly Global Risk Watch newsletter, please simply complete the form and submit.

Please feel free to contact us regarding our services, interviews, publications, and lecture requests.

Did you find this useful?