In the ratio of corporate debt to South Korea’s gross domestic product (GDP), it has been revealed that the country has moved from the fourth to the third position globally in just three months.
According to the world debt report released by the Institute of International Finance (IFF) on Nov. 16, covering 34 countries with the eurozone represented as a single entity, South Korea ranked third globally in the ratio of corporate debt to GDP for the third quarter of this year. The country’s corporate debt ratio stood at 126.1%, trailing behind Hong Kong at 267.9% and China at 166.9%.
South Korea’s corporate debt-to-GDP ratio, which was the fourth highest in the world at 120.9 percent in the second quarter, has risen by 5.2 percentage points in just three months, securing the third position globally and surpassing Singapore. Meanwhile, Singapore’s corporate debt-to-GDP ratio decreased from 130.2% to 125.0%, showing a drop of 5.2 percentage points during the same period.
Compared to the third quarter a year ago, the corporate debt-to-GDP ratio in South Korea has risen by 5.7 percentage points, marking the highest increase globally, following Russia at 13.4 percentage points and China at 8.6 percentage points. Over the past year, nine countries experienced an increase in the corporate debt ratio, including Russia, China, South Korea, and Saudi Arabia at 5.5 percentage points, India at 2.6 percentage points, Vietnam at 2.5 percentage points, Kenya at 1.2 percentage points, South Africa at 0.3 percentage points, and Egypt at 0.1 percentage points. In contrast, the eurozone saw a decrease of 8.0 percentage points, while the United Kingdom, Japan, and the United States each experienced a reduction in corporate debt ratios of 3.6 percentage points, 2.5 percentage points, and 2.2 percentage points, respectively.
The IIF also compared the increase in corporate bankruptcy rates among the 17 major countries, including South Korea, from the beginning of this year until October, compared to the same period last year. South Korea ranked second with an increase of around 40 percent, following the Netherlands, which had approximately 60 percent. The countries included in the comparative analysis were South Korea, the United States, the United Kingdom, France, Germany, the Netherlands, Finland, Belgium, Spain, Sweden, Denmark, Turkey, Canada, Japan, Australia, Singapore, and South Africa.
While the household debt-to-GDP ratio in South Korea remains high, it has slightly decreased compared to the second quarter. In the third quarter of this year, the figure was 100.2 percent, showing a 1.5 percentage point decline from the previous quarter at 101.7 percent. However, the country still holds the highest household debt ratio globally. Hong Kong ranks second with 95.2 percent, and Thailand comes in third with 91.5 percent, both falling below the 100 percent mark in terms of household debt-to-GDP ratio.
South Korea ranks 22nd globally with a government debt-to-GDP ratio of 48.9 percent. Over the past year, it experienced the fourth-highest increase of 4.7 percentage points, following Hong Kong with 23.3 percentage points, Argentina with 8.1 percentage points, and China with 7.1 percentage points. Japan holds the highest government debt ratio at 239.9 percent, followed by Singapore at 170.8 percent, the United States at 117.6 percent, and Hong Kong at 103.4 percent.