ANN/THE KOREA HERALD – South Korea’s total debt, encompassing household, corporate, and government obligations, rose by four per cent in the third quarter of last year, exceeding KRW6.2 quadrillion (USD4.24 trillion), according to data from the Bank for International Settlements (BIS) released. The figure is equivalent to 2.5 times the country’s gross domestic product (GDP).
By the end of the third quarter of 2023, the country’s non-financial sector credit – often referred to as total debt – stood at KRW 6,222 trillion, marking a 4.1-per-cent increase from the same period in 2022 and a 0.9-per-cent rise from the previous quarter.
Non-financial sector credit represents the total outstanding debts held by households, non-financial businesses, and the government, excluding the financial sector. This measure, derived from financial circulation statistics, is widely used for international comparisons of credit levels among economies.
South Korea’s total debt first surpassed KRW5,000 trillion in early 2021 during the COVID-19 pandemic and has continued to climb, crossing the KRW6,000 trillion threshold by the end of 2023.
Of the total debt of KRW6,222 trillion, government debt accounted for 18.3 per cent, which is smaller than the borrowings of companies and households, yet it has shown the fastest growth rate among these categories.
Government debt surged to KRW1,141 trillion, reflecting an annual increase of 11.8 per cent, while corporate and household debts increased by 2.9 per cent and 2.1 per cent, respectively.
The growth of the total debt-to-GDP ratio has slowed. At the end of the third quarter of last year, it stood at 247.2 per cent, the lowest level since the end of the second quarter of 2021, when it was 247 per cent. The ratio peaked at 252.9 per cent at the end of the second quarter of 2023 and has been falling for five consecutive quarters.
Additionally, the ratio of corporate debt to GDP has decreased for four consecutive quarters, reaching 111.1 per cent, while the household debt ratio also fell from a year earlier to 90.7 per cent, marking the lowest level since the end of the first quarter of 2020.
In separate data released by the Institute of International Finance, Korea’s household debt-to-GDP ratio was the second highest among major countries in the fourth quarter of last year.
The debt-to-GDP ratio reached 91.7 per cent at the end of the fourth quarter of 2024, placing Korea second among 38 major countries.
