More and more analysts at home and abroad are reiterating that Korea’s economic fundamentals are solid. They cite robust performances of some major conglomerates and sufficient foreign exchange reserves, forecasting a bullish stock market.
Optimists say that Korea has successfully weathered a variety of global negative factors unlike major emerging countries that suffered a plunge in stocks and depreciation of their currencies.
Policymakers including Bank of Korea governor Kim Choong-soo also recently shared the analysts’ view.
“Except for Korea, there is no country in the neighboring region continuously posting a surplus in account balance,” he told reporters.
But the combined debt held by households shows that the financial status of the country is sharply divided between the state and corporate sectors and the household sector, despite the rosy outlook painted by some analysts and policymakers.
Household debt has increased annually by double-digits over the past decade, twice as fast as income growth.
According to the BOK, households saw their combined debt snowball with yearly growth of 11.7 percent between 1999 and 2012. In contrast, their annual income growth stood at 5.7 percent.
Household debt is estimated to have exceeded 1 quadrillion won ($909 billion) at the end of 2012, surging from 665.4 trillion won five years ago.
The figure indicates that per capita debt has reached 26 million won.
Further, the nation’s household debt-to-GDP ratio reached 81 percent, exceeding the 73 percent OECD average, according to the Korea Chamber of Commerce and Industry. Korea ranked third in the pace of debt growth among OECD members with 9.8 percent, following Greece (12.1 percent) and Turkey (10.8 percent).
The seriousness in ordinary peoples’ financial soundness is also applicable to this year.
Korea reported a 2.3 percent growth in gross domestic product during the second quarter on a year-on-year basis. Households’ real income, however, grew only 1.3 percent over the corresponding period.
By Kim Yon-se (
kys@heraldcorp.com)
