Singapore one of 5 Asian countries with credit bubble risk

With Thailand, Malaysia, China, and Taiwan.

According to credit insurer Coface, said that Singapore along with these four other Asian countries are at risk of creating a credit bubble because "both the total credit outstanding to GDP ratio and credit growth are too high" in these nations.

Here's the rest of emerging markets and regional forecast from Coface:

Emerging markets are going to continue to register robust growth this year. We once even expected it to be a bit stronger than last year. However it turns out that growth will be lower than its pre-crisis level in most major emerging markets and we have revised down our 2013 forecast for a number of them. Against this backdrop our 2013 GDP growth forecast stands at 8.0% in China (versus 7.8% in 2012), 5.5% in India (4.0%), 2.8% in Brazil (0.9%) and 3.0% in Russia (3.4% in 2012).

There are two main rationales behind this. First, some large emerging markets are suffering from infrastructure weaknesses limiting their growth potential (see for example India and Brazil). In addition to this, growth has been partly driven by a high credit growth to the private sector in the bulk of large emerging countries over the past years. As a result, the private sector indebtedness is now comparatively high in some of them. The household debt in Korea and South Africa illustrate this and the corporate debt level is high in China and Brazil. If both infrastructure weaknesses and high private sector debt are combined, inflation tends to be relatively high. This makes it difficult for the central bank to cut rates even if growth slows (such as in Brazil and South Africa).

On a regional basis, growth will stay at a high level in Asia ex-Japan. The Philippines (GDP growth expected at 6.5% this year) and Indonesia (6.5% too) are benefiting from a very dynamic domestic demand along with a comparatively low trade exposure to the most advanced economies. Malaysia and Thailand are profiting from recent expansionary fiscal policies. Growth will be close to 5% there in 2013. But we have only revised down our Korea’s growth forecast to 2.5%: the manufacturing sector has been suffering from the won appreciation over the past months, especially versus the yen. Besides, private consumption and construction investment are restrained by a very high household debt to GDP ratio (89% of GDP in Q3 2012).

In addition to Korea, the credit bubble risk needs to be watched out in Thailand, Malaysia, China, Singapore and Taiwan, insofar as both the total credit outstanding to GDP ratio and credit growth are too high there.