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Covid-19 seeds of Asia’s next financial crisis

TOKYO – After a year of scrambling to avoid another Great Recession, central bankers are now faced with a “be careful what you wish for” dilemma.

Monetary officials may get the strong economic growth rebound for which they hoped. They may not like, however, how debt markets respond.

If last week’s chaos in fixed-income circles is any guide, 2021 will be the year of what DBS Bank strategist Eugene Leow calls the “reflation tantrum” that imperils asset markets everywhere. 

That could make 2013’s mini-crisis look tame. And this could be a particular problem for Asia in two respects – one short term, one longer. The first relates to the breathtaking amounts of debt developing Asia accumulated in the Covid-19 era, and that’s just so far.

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