The Bank for International Settlements (BIS) announced on Dec. 16 that South Korea’s household debt-to-nominal GDP ratio was 92.9 percent, eighth-highest among those of 43 countries, at the end of the second quarter of this year. The ratio increased by 0.8 percentage point in three months and the rate of increase rose in three quarters.
Compared to the end of the second quarter of 2018, South Korea’s household debt-to-nominal GDP ratio increased 2.6 percentage points, third-highest behind Hong Kong’s 4.3 percentage points and China’s 3.9 percentage points.
Since the third quarter of 2010, the debts of South Korean households have increased faster than the growth of the South Korean economy. According to the BIS, the debts increased 9.1 percent year on year in the second quarter of 2010, when the South Korean economy posted a nominal growth of 10.6 percent. However, the figures became 9.7 percent vs. 8.3 percent in the third quarter of 2010 and the debts have increased faster for 36 quarters in a row.
The South Korean government has tightened its loan regulations since 2017. Although this has led to a slower increase in household debts, the nominal economic growth is still slower due to low consumer prices, a stagnant economic growth, etc.