Second Only to China
The pace of household debt growth in Korea is the second fastest in the world, only after that of China.
The ratio of Korea’s household debts to gross domestic product (GDP) stood at 96.9 percent at the end of the third quarter of last year. Household debt was close to the overall size of the Korean economy, said the Bank for International Settlement (BIS) and the Bank of Korea on March 17.
The ratio ticked up 0.9 percentage point from the second quarter of 2018. This was the second largest after that of China (1.2 percentage points) among the 43 countries of the world that BIS checked. China and Korea were followed by Chile (0.6 percentage point), France, Russia, Brazil and France (0.4 percent point).
Compared to the same period of last year, Korea's household debt grew second fastest. The top spot was taken by Luxembourg (5.4 percent), which was followed by China (3.5 percentage points) and Korea (2.7 percentage points).
The Korean government’s eased regulations on loans and the BOK’s cut in the interest rate in mid-2014 expedited the rise in the household debt ratio in Korea. Over the past four years, Korea’s household debt ratio has risen by 13.8 percentage points, second only to that of China (16.2 percentage points).
In terms of BIS standards, Korea's ratio ranked seventh, followed by Switzerland (128.6 percent), Australia (120.5 percent), Denmark (116.7 percent), the Netherlands (102.7 percent), Norway (100.5 percent) and Canada (100.2 percent). However, all of these countries enjoyed falls in their household debt ratios in the third quarter of last year.