Soaring Household Debt
According to the Bank for International Settlements (BIS), South Korea’s household debt-to-GDP ratio amounted to 92.8% at the end of last year, up 4.7 percentage points from a year ago. The BIS recently released data on 43 countries’ household debt-to-GDP ratios. According to the data, Norway (6.3 percentage points) and China (5.6 percentage points) are the only two that showed a higher rate of increase than South Korea.
Back in 2012, South Korea ranked as low as 17th with a year-on-year increase in household debts of 1.1%. However, the figures rose to 3.9% and fourth in 2015.
When it comes to the household debt-to-GDP ratio, South Korea came in eighth at the end of 2016. Its ratio rose from 79.7% (13th among the 43 countries) to 80.8% (12th) between 2011 and 2012, and then to 82.3% (11th) in 2013, 84.2% (ninth) in 2014 and 88.1% (eighth) in 2015. As of the end of last year, the ratio was 79.5% for the United States, 58.6% for the eurozone, 62.5% for Japan and 87.6% for Britain.
South Korea’s total household liabilities reached US$1.263 trillion at that point in time, only US$141.4 billion less than its nominal GDP for 2016 estimated by the International Monetary Fund (IMF).
In the meantime, Switzerland’s household debt-to-GDP ratio reached no less than 128.4% at the end of 2016. It was followed by Australia (123.1%), Denmark (120%), the Netherlands (109.6%), Norway (101.6%), Canada (101%) and New Zealand (94%).
As far as 18 emerging economies are concerned, South Korea was second to none in terms of household debt-to-GDP ratio. In this group, it was followed by Malaysia (70.3%), Thailand (70.2%) and Hong Kong (67.7%).
South Korea’s household debt-to-GDP ratio had been as low as 1.9% back in 1962. However, it exceeded 50% in the 2000s and 60% in 2002. Since then, the country has shown the highest household debt-to-GDP ratio among the emerging economies for 14 years in a row.