S. Korea’s unruly household debt woes deepen
June 1, 2014 Leave a comment
S. Korea’s unruly household debt woes deepen
2014.05.27 14:37:39
Household debt in South Korea set another fresh record.
The growth of household debt remains unchecked even as it already broke through the 1,000 trillion ($976.7 billion) won threshold last year.
Outstanding household debt came to 1,024.8 trillion won in late March, up 3.4 trillion won from three months ago, said the Bank of Korea Tuesday.
Household debt, Korea’s flagship data for illustrating the level of households’ debt, refers to the sum of loans extended to households by depository institutions and other financial agencies such as insurers, pension funds, private lenders and public financial organizations, as well as credit purchases offered by card companies.
Household debt shrank about 900 billion won in the first quarter (Q1) of last year. But afterwards, the debt has continued to climb to fresh record for a year, as it expanded back 16.7 trillion won in Q2, 14 trillion won in Q3 and 27.7 trillion won in Q4.
The household debt growth turned sluggish to 3.4 trillion won in Q1 of this year primarily due to seasonal factors such as year-end bonuses and house moving.
Of the household debt, household loans increased 4.7 trillion won to 967.6 trillion won at the end of March from three months ago, and credit purchases contracted 1.2 trillion won to 57.2 trillion won.
“The expansion of household debt might decelerate, but a decrease in the debt is unlikely. This is because income growth is limited, while the demand for loans such as those for lump-sum deposit ‘jeonse’ and sole traders remains steady,” said Lee Jun-hyup, a researcher at Hyundai Research Institute.
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