Per capita national debt nears W15m

South Korea’s national debt per capita stood at 14.83 million won ($12,145) as of Saturday, data from the National Assembly showed Sunday, feeding concerns that the growing figure may take a toll on the nation’s economy amid sluggish growth projections.

National debt held by Asia’s fourth-largest economy stood at 769.18 trillion won in the same period, according to the data provided in the form of a debt clock on the website of the parliament’s budget office.

It has been growing at a fast pace in the last two decades, as the corresponding figure for 2000 stood at 100 trillion won, translating to 2.37 million won per capita.

The pace is likely to gain further momentum this year with the government already pushing for a third supplementary budget worth 30 trillion won to minimize the economic fallout from the COVID-19 pandemic. This follows the previous two extra budgets worth a combined 23.9 trillion won, both approved by the National Assembly separately earlier this year for similar purposes.

The government initially forecast the national debt to reach 819 trillion won following the passage of the second extra budget last month, and with the third extra budget in the pipeline the figure is only expected to grow.

A separate set of data released by an opposition lawmaker suggested that Korea’s debt-to-gross domestic product ratio could surpass 45 percent this year, with the government issuing additional debt-covering bonds for the third supplementary budget coupled with lackluster economic growth due to COVID-19 risks.

Unlike household debt, the effects of long-term public or national debt on the economy or future generations may not be immediately visible, but there is likely to be increased pressure for productive economic activities to keep the economy afloat. When the government borrows, the country’s productive capacity works like an asset in the exchange.

Korea’s economy contracted 1.4 percent on-quarter in the January-March period of the year. This marks the sharpest quarterly contraction since the last quarter of 2008, when the country was hit by the waves of the global financial crisis.

The International Monetary Fund recently projected Korea’s economy to shrink 1.2 percent this year, saying that the global economy would see the steepest downturn since the Great Depression of the 1930s.

By Jung Min-kyung (mkjung@heraldcorp.com)