Why analysts think ASEAN-5 economies are suffering 'debtopia'

An expansion in credit.

According to UBS Investment Research, the ASEAN-5 economies enjoyed a moment in the sun in 2012, with growth outperforming the rest of the emerging world for the first time in years. 

However, that outcome was achieved via an expansion in credit, taking advantage of a low cost of funding rather than gains in competiveness.

Here's more from UBS Investment Research:

This is a phenomenon we have called debtopia in our recent work.

On average, ASEAN-5 exports in USD terms were close to flat or contracted in 2012 and early 2013.

Meanwhile bank credit growth was in double digits at the expense of indicators of sustainability such as the region’s current account surpluses (which declined) and bank loan to deposit ratios (which rose).

Although Indonesia and Thailand are the only countries actually in current account deficit – meaning they are borrowing abroad to finance consumption and investment – almost every country has seen a downtrend in the level of the current account surplus.

In the Philippines, where the current account has declined less, there are clear signs of low interest rates driving booming domestic spending. Activity in the interest rate sensitive construction sector is up 17% in real terms on the year in Q2 2013.