South Korea’s household debt ratio is the highest in the world

SEOUL, Nov. 15 (Yonhap) — South Korea has the highest domestic debt-to-GDP ratio among the world’s major economies, a report released by the Institute of International Finance showed on Monday, suggesting it may contract. Consumption puts pressure on the economy in the future.

South Korea’s household debt ratio stood at 104.2% by the end of June this year, the highest number among 37 economies surveyed, according to the report.

Hong Kong came in second with 92%, followed by the United Kingdom with 89.4%. US 79.2 percent; Thailand 77.5 percent; Malaysia 73.4% and Japan 63.9%.

South Korea’s share registered an increase of 6 percentage points over last year, the fastest growth rate.

Among the countries surveyed, South Korea is the only country with more household debt than its economic size.

South Korea is scrambling to reduce household debt, which has grown at a faster rate since 2020, amid national efforts to stimulate the economy affected by the COVID-19 pandemic.

Household indebtedness reached an all-time high of 1805.9 trillion won ($1.53 trillion) in June, up 41.2 trillion won ($34.9 billion) from the previous three months, according to South Korean central bank data.

Household debt rose 7.9 percent year-on-year in 2020, a faster growth rate than the 4.1 percent increase recorded the previous year. Debt grew 10.3 percent on an annual basis in the second quarter of this year.

The ratio of South Korea’s national debt to GDP was 47.1%, ranking 26th, indicating that the financial strength is relatively good.

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