Macroscope | Bank collapses are just the start of the world’s financial woes – indebted businesses will be next
- Decades of easy money have led to high levels of corporate debt worldwide and in Asia especially
- Now with the sharp rise in interest rates, businesses – particularly small and medium-sized firms that are the backbone of economies like Hong Kong – risk defaulting on their loans

The illusion that the consequences of financial excess can be bought off by ever-increasing monetary indulgence continues to dissipate, as is evident from recent bank runs. But the worst is yet to come. These bank runs will be followed by an epidemic of corporate bankruptcies, as sure as night follows day.
This is a particular hazard in Asia where levels of corporate – and in some cases household – borrowing have soared in recent years to match or even overtake government indebtedness.
The debt of global non-financial companies was US$88 trillion at the end of 2021 when it exceeded the value of global gross domestic product for the first time. It eased slightly in 2022 but since then things have taken a turn for the worse where dealing with the burden of debt is concerned.
This is because interest rates have surged over the past year from the near zero (and sometimes even negative) levels they were reduced to in the wake of the 2008 global financial crisis by central banks desperate to stave off a repeat of the Great Depression.