The debt burden shouldered by the nation’s households was heavier than those in China and Hong Kong largely because of massive home mortgages, Fitch Ratings said on Saturday.
Fitch said in a report that the nation’s household debt accounted for 82.6 percent of GDP in the first half of last year, far higher than the 66.4 percent in Hong Kong and 41.8 percent in China.
Compared with neighboring economies, only South Korea beat Taiwan with a ratio of 90 percent, according to Fitch.
Since 2005, home mortgages have made up more than 50 percent of total household debt in Taiwan, with the ratio hitting a high of 73 percent in 2010 when home prices were soaring, but economic growth has since slowed, Fitch analyst Jenifer Chou (周筱娟) said.
As the nation’s property market weakened at a more noticeable pace in 2014, the home mortgage-to-household debt ratio started to decline, she said.
The ratio now stands near 60 percent, Chou said.
Home mortgages make up about 70 percent of household debt in Hong Kong and 54 percent in China, but the ratio of household debt to GDP in the two markets are lower than Taiwan’s, Fitch said
China’s debt burden of 41.8 percent is the lowest in the Asia-Pacific region, it said.
Taiwanese households also shoulder financial burdens from consumer loans, while many owners of small and medium-sized firms obtained loans for their businesses under their own or a relative’s name instead of the company name, which also boosted overall household debt, Chou said.
In a report released in March, Fitch said that Taiwan’s high household debt and rising debt servicing pressures are expected to affect the nation’s economic growth.
It added that this could prove an impediment to improvements in the financial profiles of Taiwanese banks.
Fitch said it expects the nation’s household debt-to-GDP ratio to increase to 84 percent this year and next, since banks have been aggressively extending working capital loans to individuals and entrepreneurs.
Meahwhile, the average national debt shouldered by each Taiwanese remained flat as of the end of last month for a third consecutive month, according to Ministry of Finance statistics.
The national debt per capita was about NT$240,000 (US$7,944.4), according to the National Treasury Administration.
As of last month, the nation’s outstanding long-term debt with a maturity of more than one year totaled NT$5.43 trillion, while the nation’s short-term debt was NT$222.9 billion, the agency said.
As President Tsai Ing-wen’s (蔡英文) administration plans to spend NT$880 billion over the next eight years on infrastructure projects, there are concerns that the national debt could soar.
However, the funds would be allocated over a period of eight years and not spent at one time, the ministry said, adding that the government is planning to allocate a budget of NT$22.9 billion for this year.
If that budget is added to the total national debt at the end of last month, national debt per capita would increase to NT$241,000, the ministry said.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last