Rising debt levels in Asia’s “seemingly healthy” countries might drive the region’s GDP below current anticipated levels, World Bank Chief Economist Indermit Gill told the media on Monday.

Gill said he was still concerned about the slow pace of debt restructurings under the Group of 20 Common Framework for Restructuring the Debts of the Poorest Countries, and that such processes needed to be accelerated.

However, he expressed concern over Asia’s shockingly high debt levels, stressing that growing government borrowing from domestic markets would limit the amount of credit accessible to private enterprises, resulting in faltering investment.

“We have a simultaneous problems: too much debt and too little investment,” he said. “There’s a lot of government consumption and private consumption being financed through debt. There is not a lot of investment being financed through credit, and that’s not great.”

He remarked without giving any exact figures that the outcome might be “much lower growth” than we were anticipating. Therefore, there won’t be any debt crisis; instead, there will only be slow growth. But it’s a problem that’s just as terrible. We are now discussing very, very massive countries.

Gill declined to provide particular instances, but a recent World Bank research revealed that the average South Asian country had a government debt ratio of roughly 85% of GDP, greater than that of other emerging market and developing economy regions.

The analysis showed that the region’s debt is rising as a result of rising government spending, low domestic revenue, and rising debt servicing expenses. The report warned that a combination of variables, including losses at a significant state-owned bank, might push borrowing prices over what is manageable.

According to Gill, debt levels are also rising throughout East Asia.

“If you look at the debt numbers (in East Asia), all of them are up. The one which is relatively low is China, but we know that in China, it’s not the central government debt that’s the problem, it’s the subnational and corporate and the household debt.”

Gill expressed concern that the concentration on the Common Framework’s weakest members could result in unpleasant surprises in other, more developed nations.

(Adapted from Reuters.com)

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