According to Bloomberg, the annual economic growth rates of South Korea, Singapore, Taiwan and Hong Kong are estimated to fall short of 3% this year. Its current estimate is 2.6% for South Korea, 1.9% for Singapore, 1.5% for Taiwan and 2.4% for Hong Kong. Last year, the figures were 2.6%, 2.0%, 0.8% and 2.4%, respectively. These were in stark contrast to those of China (6.9%), Vietnam (6.7%), India (7.3%), the Philippines (5.8%) and Malaysia (5.0%).
Market research firm Capital Economics also predicted that the four countries in question would be unlikely to show a substantial economic growth for two years to come. As the reasons, it mentioned debt risks, burst real estate bubbles and structural problems such as the aging of the population.
According to the Korea Capital Market Institute, South Korea recently hit 87.2% in household debt-to-GDP ratio, the highest among 19 major emerging economies. The ratio is approximately 60% in Singapore. Capital Economics said that the amount of private bank loans has been on a rapid increase in Singapore to the point of exceeding 130% of its GDP and the country is likely to go through a period of deleveraging for years to come.
In Hong Kong and Taiwan, burst real estate bubbles are expected to affect economic growth rates. The average housing price in Hong Kong more than doubled between 2009 and September last year. Since it reached a peak then, it has decreased by about 11% until now.
One of the four countries’ common concerns is a decrease in working-age population that has been triggered by rapid aging. In 2050, those aged 65 and more are expected to account for 35.9% of the population of South Korea. The estimates are 35.3% and 34.9% for Hong Kong and Taiwan, respectively.