People’s Bank of China wary of rising household debt – could damage economic recovery

A PBOC research paper is highlighting that a household credit boom could tend to drag down economic growth more so than corporate debt.

  • researchers say household leverage slowed real per-capita GDP growth by 3.7% in five years
  • due to indebted houlsegholds reducing consumption
  • and that highly-indebted households are vulnerable to negative income changes
  • recommend that policy makers strictly control the leverage of households

The rapid increase in household debt in China has been driven by mortgages & a relaxation in lending standards.

A PBOC research paper is highlighting that a household credit boom could tend to drag down economic growth more so than corporate debt.

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