South Korea’s gross national debt, encompassing household, business, and government liabilities, surpassed 6,000 trillion won ($4.3 trillion) by the end of last year. This debt level is 2.7 times the country’s gross domestic product (GDP) and has doubled in approximately 11 years.
According to the Bank for International Settlements (BIS), on July 1, last year’s close, South Korea’s household, corporate, and government debt stood at 6,033 trillion won. Corporate debt was the largest component at 2,734 trillion won, household debt at 2,246 trillion won, and government debt at 1,053 trillion won. The nation’s total debt first surpassed 3,000 trillion won in the first quarter of 2013, doubling in less than 11 years to reach the current level.
The rapid increase in debt is particularly concerning as it has grown faster than in other countries. At the end of last year, Korea’s total debt was 269.8% of GDP, ranking fifth among Group of 20 (G20) countries, up from ninth place a decade ago.
In contrast to other industrialized nations that have reduced their debt since the COVID-19 pandemic, Korea’s debt has continued to rise. By the end of last year, the country’s debt-to-GDP ratio was 4.7 percentage points higher than at the end of 2021, when the pandemic was still prevalent. Among the 11 advanced economies identified by the BIS, Korea was the only one with an increasing debt-to-GDP ratio during this period.
Household debt represents 37% (2,246 trillion won) of Korea’s total gross national debt. In comparison, household debt accounted for 27% of debt in other industrialized countries during the same period. Korea’s economy is significantly reliant on household debt, which is more susceptible to changes in income and asset prices than government and corporate debt.
Household debt in Korea has been rising steadily since it exceeded 1,000 trillion won in 2011. As of the end of last year, the BIS reported that Korea’s household debt-to-GDP ratio was 100.5%, the highest among the 11 advanced economies categorized by the BIS, following Switzerland (127.8%), Australia (109.7%), and Canada (102.2%).
