SEOUL, Jan. 9 (Korea Bizwire) – Household debt in South Korea is growing at one of the fastest rates among OECD countries, which could be a serious threat to quality of life in the future.
According to the OECD’s ‘How’s Life? 2017’ report, the debt-to-disposable income ratio of South Korean households was 170 percent as of 2015, the 10th-highest figure among OECD member states.
South Korea’s household debt-to-disposable income ratio of 170 percent far surpasses the average figure of 123 percent, leaving behind major developed countries like the U.S. and Japan.
The figure stood around 50 percent in Hungary and Latvia, while Russian households had the lowest debt-to-disposable income ratio of 29 percent among the OECD countries.
Household debt refers to the total amount of money that a single household owes in various forms such as mortgage loans, credit card debt, car loans, and student loans.
The OECD categorizes household debt as a potential threat to quality of life and has warned that when household debt reaches unmanageable levels, the country’s economic system could face serious repercussions.
The report says South Korea’s household debt is growing at one of the fastest rates, along with Greece and Switzerland.
The household debt-to-disposable income ratio in South Korea was 143 percent in 2008 before rising to 170 percent in 2015, jumping 27 percentage points.
Over the same time, only Greece and Switzerland experienced a faster growth rate, with increases of 32 percentage points and 31 percentage points, respectively.
Given the declining household debt-to-disposable income ratios in countries like Denmark and the Republic of Ireland, South Korea is bucking the trend.
The OECD’s annual report also measured the level of public trust in the government between 2014 and 2016, and just over 26 percent of South Koreans said they trust the central government, trailing behind Brazil and Greece.
The average public trust level in the government stood at 37.6 percent among OECD countries, making the South Korean government the least trusted by the public following Slovenia and Greece.
Ashely Song (email@example.com)