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Korea’s ratio of household debt to GDP is the highest among major economies, despite the revision of base point to 2020 from 2015, data showed Sunday. The figure for corporate debt-to-GDP came to the fifth-highest, down from the previous fourth-highest.
According to the Bank of Korea and the Ministry of Economy and Finance, Korea’s household debt-to-GDP ratio came to 93.5 percent, down 6.9 percentage points from 100.4 percent, as a result of the base year change.
The corporate debt-to-GDP ratio dropped to 113.9 percent, down 8.4 percentage points from 122.3 percent.
The downtick is attributed to the increase in gross domestic product (GDP) to 2,401 trillion ($1.7 trillion) won last year, up from 2,236 trillion won.
However, despite the revision, Korea’s household debt-to-GDP ratio was still the highest among the 34 countries last year, as measured by the International Institute of Finance.
Korea was followed by Hong Kong (93.3 percent). The gap between the two countries narrowed to 0.2 percentage points, down significantly from 7.1 percentage points.
The third-highest household debt-to-GDP ratio was registered by Thailand (91.6 percent), followed by the United Kingdom (78.5 percent) and the United States (72.8 percent).
Hong Kong had the highest corporate debt-to-GDP ratio of 258 percent, followed by China (166.5 percent), Singapore (130.6 percent) and Japan (114.5 percent).
The Bank for International Settlements will announce last year’s debt ratio of each country.
The monetary authorities will continue to curb the snowballing household debt, as regulated by macroprudential measures.
“Korea’s household debt levels are still elevated compared to its advanced peers,” an observer said. “The financial stability authorities will push ahead with measures that bolster fiscal consolidation irrespective of the base point change.”
The measures are likely to maximize the use of policy tools to have corporate debt under control, mindful of potential ramifications in the debt-ridden project financing markets.
“A significant portion of liquidity available was mobilized to meet the need of project financing businesses. It will be the job of the financial authorities to tighten lending rules and fortify the financial soundness of at-risk market players.”