Per-Capita Debt to Hit W100 Million by 2038

  • By Shin Eun-jin

    August 31, 2021 11:04

    A Korean child born this year will shoulder more than W100 million worth of debt when they graduate from high school as fiscal borrowing spirals out of control (US$1=W1,166).

    The Korea Economic Research Institute on Monday forecast that per-capita debt will surpass W100 million in 2038, W200 million in 2047 and W300 million in 2052 if fiscal debt grows at the current rate.

    Korea's sovereign debt rose by W124 trillion last year alone to W847 trillion due to surging expenses to deal with the pandemic. Its debt-to-GDP ratio stood at 44 percent.

    Korea had long considered a ratio of 40 percent the Maginot Line, but it crossed that threshold last year and is expected to reach 47.2 percent this year.

    Global rating firm Fitch has already warned that the surging debt is a potential threat to Korea's economy.

    KERI said Korea's sovereign debt will reach W1.91 quadrillion in 2030, W3.52 quadrillion in 2040 and to W6.47 quadrillion in 2050 even if the growth rate slows to pre-pandemic levels.

    As a low birthrate leads to a decline in the number of workers, Korea's per-capita debt will rise from W22.7 million in 2020 to W105 million in 2038, W210 million in 2047 and 307 million in 2052. 

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