SEOUL: South Korea’s household debt-to-gross domestic product (GDP) ratio is the second highest among major nations, following Canada, amid growing concerns about rising household borrowing amid weak growth and domestic demand.
The debt-to-GDP ratio for South Korea came to 91.7% in the fourth quarter of 2024, which marked the second highest among 38 major nations, according to the data from the Institute of International Finance.
Canada topped the list with 100.6%, and Thailand came in third with 92.4%, followed by Hong Kong with 93.2%, Britain with 78.1% and the United States with 71.9%, the report showed.
The average global ratio came to 60.3%.
In February, household loans extended by South Korean banks rose for the first time in three months to come to 1,143.7 trillion won (US$787.34bil) amid rising housing prices in the affluent districts of southern Seoul following state deregulatory moves.
Last year, financial authorities pressed major lenders to implement tight lending rules to rein in surging household debts and rising home prices.
But banks eased some of the regulations at the beginning of the year, while demand for loans went up during the season for moving.
Also attributing to the surge in household debt was the Seoul municipal government’s easing of the so-called land transaction permission zone scheme imposed in some areas of Seoul’s Gangnam, Seocho and Songpa districts last month, which caused a marked increase in real estate prices there and in adjacent regions.
The scheme requires state permission to buy or sell homes in the designated areas.
It came into force in 2020 in an effort to curb property speculation and soaring home prices. — The Korea Herald/ANN
