- September 24, 2017
- Posted by: admin
- Category: Daily News
- South Korean households’ debt service burden reached an all-time high in 1Q17 with the pace of its growth ranking first worldwide, an international report said 24 Sep 17.
- According to the report by the Bank for International Settlements (BIS), the debt service ratio (DSR) of the local household sector came to 12.5% in 1Q17.
- It was up 0.7% from 2016 and marked the highest level since 1Q99, when BIS started to compile related data. The y/y increase was the largest among the 17 countries surveyed, while the 1Q17 figure placed fifth highest.
- The DSR measures the share of household income used to service debt. It’s regarded as a reliable early warning indicator for a systemic banking crisis. South Korean households’ DSR had been on the rise since 2015 after the government softened regulations on the real estate sector.
- The report also showed South Korea’s household debt reaching 93% of its GDP in 1Q17, the eighth highest in the world and the highest among 18 emerging economies. The figure was up from 88.4% from 2016, representing the second-fastest growth pace among the surveyed countries after China’s.
- South Korea has been dogged by snowballing household debt, which is estimated at KRW1,400tr (USD1.23tr) and could become a “time bomb” for Asia’s fourth-largest economy.
External Link : https://www.bis.org/publ/qtrpdf/r_qt1709_charts.pdf