February 26, 2014 13:16
Korea's household debts surpassed a whopping W1,000 trillion as of the end of last year (US$1=W1,074). The debt burden is rising much faster than incomes, posing a huge obstacle to economic recovery.
The Bank of Korea on Tuesday said the country's total household debt stood at W1,021.3 trillion as of the end of 2013, compared to W963.8 trillion at the end of 2012.
Household debt includes loans from banks and other financial institutions as well as credit card debt.
Korea's household debt stood at less than W500 trillion in 2004 and more than doubled in nine years, rising by an average of around W60 trillion a year led by housing loans. More and more people borrowed to buy homes, attracted by rising property prices and low interest rates.
The growth rate slowed to less than W50 trillion when the real estate market entered a deep slump in 2012, only to rise again by W60 trillion last year.
Household debt level boils down to W58.11 million per family, up W2.57 million from 2012. In 2004, it stood at just W34.52 million.
The problem is that debt is rising more quickly than incomes, prompting Koreans to keep their wallets shut. In 2004, the ratio of household debt compared to disposable income was 103 percent, but that had risen to 137 percent by June last year.
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