Finance ministers have a difficult task ahead of them in 2015. Governments across the Asia-Pacific region are faced with a mountain of debt, weak demographics and the onset of deflationary pressure.
States have not deleveraged since the 2008 global financial crisis as many had promised. As the outlook for economic growth darkens, fiscal discipline will become even harder to enforce politically.
Global debt has risen by $57 trillion since 2007 to $199 trillion according to consultancy McKinsey. A big part of that is due to China, where debt has quadrupled to $28 trillion, higher than in the US, funded by property, shadow banking and mushrooming local government borrowing.
To be sure, debt is a key arrow in governments’ quiver to boost demand and in emerging economies often reflects deeper financial markets.
However, the pace of debt growth in Japan, China and Singapore in particular looks unsustainable as these countries face the added challenge of aging populations.
Morgan Stanley’s research on Asia’s debt indulgence shows the region’s debt to GDP ratio climbed to 205% in 2014, the seventh consecutive year of growth. Public debt is too high, particularly when regarded relative to per capita income, especially in India.
Clearly, finance ministers’ debt management needs improvement if the world is to avoid another crisis and painful deleveraging down the road. Policies should be expanded to include say more privatisations.
Add to the pressure, the unfolding commodity bust, a particular problem for Asia’s largest net exporter of oil, finance ministers have their work cut out this year.
Central banks have done what they can. We have seen surprise rate cuts by central bankers from Australia to China. Policy makers should encourage banks to speed up recognition of bad debts as monetary easing is fuelling misallocations of capital.
To aid the policy debate, FinanceAsia has ranked the region’s finance ministers according to how they have positioned their countries to face the challenges ahead.
The winner of this year’s finance minister of the year award is the Philippines’ Cesar Purisima, one of the few who delivered in 2014. Purisima collected his award at our annual Achievement Awards dinner on February 4.
About FinanceAsia Magazine
Established in 1996, FinanceAsia is the leading publisher of financial news in the Asia-Pacific region. Our combination of print and online products provide the latest news, analysis and insight into Asia’s financial markets.
Published monthly from our office in Hong Kong, FinanceAsia magazine provides our readers with the latest financial trends, interviews, features and investigative reports. The publication has a readership of key decision-makers at corporations, governments, investment and commercial banks, institutional investors, asset managers, brokers, traders and financial intermediaries.
Our regular sections include:
We look at the key data behind a topical theme in Asian finance, showcased with an array of graphs and tables.
A monthly opinion column from the FinanceAsia editorial team. We provide our thoughts on a topic making the headlines.
Deal of the Month
Our regular two-page spread with its signature artwork and in-depth analysis examines the equity, debt or M&A deal that we feel has had the biggest impact on the Asian capital markets that month.
For company CEOs and CFOs, what investors think is a critical concern, and in this column we help them understand just this. Each month we speak to a Chief Investment Officer of a top fund and outline their views on corporate governance, what stocks they like and where they expect to generate the best returns.
A monthly opinion piece from a respected author or commentator on Asian business, finance or economics.
People on the Move
Here we summarise the key hires, fires and moves at the region’s banks, highlighting at least one major move each month.
We examine the major primary markets deals of the month and comment on the quality of the debt or equity transaction and the secondary market performance.
The Arts of Finance
A light-hearted look at investment opportunities surrounding the arts business in Asia.