S. Korea’s combined debt tops $2.26t

South Korea’s combined government and household debt has reached a new milestone, surpassing 3,000 trillion won ($2.26 trillion) for the first time, according to government data released on Sunday.

This significant increase is primarily attributed to a decline in tax revenue, increased government bond issuance, and aggressive borrowing by households for real estate investments.

As of the end of the second quarter, the country’s combined national and household debt reached a record 3,042 trillion won, representing approximately 127 per cent of last year’s nominal GDP.

The national debt, which primarily consists of government bonds, loans, and financial obligations, increased by 30.4 trillion won from the previous quarter to 1,146 trillion won. This rise was influenced by factors such as the sluggish economy and ongoing tax revenue shortfalls.

Meanwhile, household debt surged to a new high of 1,896 trillion won, driven by the recent recovery in housing transactions and associated loan increases.

The combined debt of the government and households rose by 44 trillion won in the second quarter, compared to a 20 trillion-won increase in the first quarter. This marked the largest quarterly increase since the third quarter of 2021, when the COVID-19 pandemic was at its peak.

Attribution: Yonhap News Agency

Subediting: M. S. Salama