Korea's Corporate Debt to GDP Ratio Rises Third Fastest among 43 countries

Korea's corporate debt to GDP ratio rose third fastest among the world's major 43 countries in the second quarter of this year, according to data disclosed by the Bank of International Settlement (BIS) on Dec. 29. Internal and external uncertainties weakened investor sentiment, while corporate lending swelled to cover operating costs including labor and material costs, analysts say.

Korea's ratio of corporate debt to GDP was 99.3 percent at the end of the second quarter of this year, up 2.1 percentage points from the previous quarter. The country with the biggest jump was Singapore which saw the ratio rise 2.9 percentage points from 116.6 percent to 119.5 percent. Chile came in second with 101.3 percent, up 2.2 percentage points from the previous quarter, and Korea placed third.

Japan's corporate debt-to-GDP ratio was 101.6 percent, up 0.2 percentage points from the previous quarter, while that of the United States stood at 75.0 percent, an increase of 0.1 percentage point. That of China suffering from increasing corporate debts fell 1.0 percent from 155.5 percent to 154.5 percent.

In terms of the absolute ratio of corporate debts to GDP, Korea stood lower than developed countries such as France, Switzerland and Japan, and some developing countries such as China and Chile. This indicates that Korea’s level itself was not high, but recorded a steep increase.