Debt-to-GDP Ratio
South Korea’s household, government and corporate (excluding financial sector) debt-to-gross domestic product (GDP) ratio dramatically grew over the past decade to surpass 230 percent.
According to a “global financial stability report” released by the International Monetary Fund (IMF) on October 11 (local time), South Korea’s non-financial sector’s debt as a percentage of GDP surged from 183 percent in 2006 to 232 percent in 2016.
As the G20 countries carried out quantitative easing (QE) policy and measures to stimulate economy as part of their efforts to overcome the global financial crisis, their average debt-to-GDP ratio rose from 210 percent in 2006 to 235 percent in 2016.
Except for Germany whose ratio decreased from 180 percent to 168 percent and Argentina from 98 percent to 73 percent, most of the economies had a higher debt-to-GDP ratio.
However, South Korea was one of the G20 economies which showed the largest increase in debts. The country ranked fifth in terms of increase in debts over the past decade with 49 percent points, following China with 112 percent points, Canada with 74 percent points, France with 62 percent points and Australia with 56 percent points.
By sector, the household debt ratio, which is considered the biggest risk factor in the national economy, rose sharply from 70 percent in 2006 to 93 percent in 2016. South Korea had the third highest household debt ratio among the G20 economies last year, following Australia with 123 percent and Canada with 101 percent.
In addition, the debt ratio of the non-financial companies grew from 83 percent to 100 percent as businesses greatly increased loans due to low interest rates. With expansionary monetary policy that has continued for years, the debt ratio of the general government also rose from 29 percent to 28 percent.