Projected to Reach 54.1% of GDP at Year-end
The International Monetary Fund (IMF) recently announced that South Korea’s government debt-to-GDP ratio would reach 54.1 percent at the end of this year.
At the end of 2017, the ratio was 40.1 percent. In the same five-year period, the ratio of 35 advanced economies is estimated to rise from 71.6 percent to 77.1 percent. In other words, South Korea’s pace of government debt increase is likely to be 2.5 times that of the 35 although the former’s government debt ratio is lower than their average.
South Korea’s government debt rapidly increased in the process of responding to COVID-19. However, more fundamental causes are low fertility and rapid population aging. According to experts, the government debt ratio of South Korea is estimated to triple within 28 years with the two factors becoming permanent.
The OECD said in its recent report that the ratio of South Korea would exceed 150 percent in 2060. The estimates for the same year of the Korea Development Institute and the National Assembly Budget Office are 144.8 percent and 161 percent, respectively.