KUALA LUMPUR – Data about household debt-to-GDP (gross domestic product) ratio showed that South Korea was top of the list of 36 other major economies over the first quarter of 2022.
News agency, Yonhap, revealed that data from the Institute of International Finance (IIF) recorded South Korea having a 104.3% debt-to-GDP ratio over the period of January to March this year.
Additionally, Lebanon came in at second with the ratio at 97.8% while Hong Kong, Thailand and Britain rounded up the top five with 95.3%, 89.7% and 83.9% respectively.
According to Yonhap, South Korea was the only nation that exceeded its household debt-to-GDP ratio among the 36 other countries that further included Japan, China, the United States, and the European Union.
The Bank of Korea reports that as at the end of March this year, South Korea’s outstanding household loans remained at 1,752.7 trillion won. The figure showed a decrease of 1.5 trillion won that was recorded as at the end of December last year.
Moderate dip in South Korea’s debt
Apart from that, IIF data showed that global economies are recording a decline in household debt-to-GDP ratios due to increasing interest rates with South Korea’s ratio dropping 0.7% from the previous 105% recorded over the January to March last year.
Despite that, South Korea’s 0.7% decline was actually far less compared to Britain which recorded a 7.2% decline.
The United States, Japan, and the European Union also recorded large declines in their household debt-to-GDP ratio with 4.7%, 4.6% and 2.9% each.
Recent statements from South Korea’s central bank further added that the hike in interest rates could cause a portion of the country’s existing household loans into non-performing loans and dampen overall spending.
As at February this year, the IIF recorded the global household debt-to-GDP ratio at US$303 trillion in 2021, as reported by Reuters.
According to Reuters, the amount had a growth of US$10 trillion due to COVID-19 related expenditures with over 80% of new debts being contributed by emerging markets.
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