National Debt-to-GDP Ratio Forecast to Rise to 46% in 2021
Bloomberg Intelligence said on May 17 that South Korea’s sovereign debt-to-GDP ratio would rise to 46 percent next year if the South Korean economy posted a negative growth of 1.4 percent this year due to a continuous impact of the COVID-19 pandemic. The research arm of Bloomberg explained that a rapid increase in sovereign debt and a decrease in GDP would occur at the same time in that case.
The South Korean government recently prepared a secondary supplementary budget of 12.2 trillion won in order to provide financial support for every household. Due to the supplementary budget, the sovereign debt-to-GDP ratio has jumped from 39.8 percent to 41.4 percent.
Another supplementary budget is in the making and its size is estimated at 30 trillion won or so. The ratio is estimated to rise to 44 percent as a result. According to Bloomberg Intelligence, the continuous increase in fiscal spending is likely to result in a sovereign debt-to-GDP ratio of close to 50 percent even if the South Korean economy grows 2.1 percent next year.