Economy at risk of overheating warns HKMA chief, hendren global group news article
“HKMA boss warns rising levels of household debt and high consumer spending could see families left in a vulnerable financial position.”
Soaring household debt and rampant consumer spending have put Hong Kong's economy at risk of overheating, the city's central bank boss said yesterday.
Norman Chan Tak-lam, chief executive of the Hong Kong Monetary Authority, told lawmakers these were "warning signals".
In a briefing to the Legislative Council's financial affairs panel, he said the ratio of household debt to gross domestic product had risen to a record 61 per cent from 59 per cent at the end of last year.
The previous record was 60 per cent in 2002.
Household debt includes credit card loans, personal loans and home loans, which are usually a family's largest debt.
The higher the ratio, the more vulnerable people will be when interest rates go up.
Chan said the surge in property prices in recent years had fuelled an increase in Hongkongers' spending on consumer items. He was concerned that private consumption has grown faster than GDP since 2005.
And because much of the consumption is based on credit, "once the interest rate turns up, the macro economy will be at risk", Chan said.