KUALA LUMPUR: Household debt-to-gross domestic product (GDP) ratios in Malaysia and Thailand remain among the highest in Southeast Asia.
Moody's Analytics noted that these markets were at risk of non-performance as interest rates normalise.
"Elevated household debt remains a major problem despite a recent slowdown in the pace of household debt growth.
"Many Southeast Asian countries are also facing skyrocketing housing prices as hot money and speculation continue to push up prices," it said in a note.
It said total debt-to-GDP ratios across the Asia Pacific region had remained well above pre-pandemic levels, although several countries such as Singapore, Malaysia and Indonesia recorded lower debt ratios in 2021 versus in 2020.
This was partly due to the success of the countries in containing domestic Covid-19 cases while keeping production lines open.
"On the other hand, Thailand, Vietnam and the Philippines had trouble containing total debt in 2021 due to tightened Covid-19-related restrictions through much of the year," it said.
As for government debt, Southeast Asia saw continued increase in 2021 although the rise was not as steep as in 2020.
Moody's Analytics said Thailand and the Philippines experienced the largest government debt-to-GDP increase across the region and across the globe between the end of 2019 and the end of 2021.
The firm noted that Southeast Asian governments raised debt ceilings during the pandemic to accommodate higher borrowing and spending to support the economy.
"Post-pandemic, fiscal consolidation is expected to begin in 2023 as countries move toward endemic-Covid-19 policies, including an easing of social distancing measures," said the firm.