South Korea Household Debt Growing Faster

South Korea’s household debt grew at the third-fastest pace in the world last year, with total obligations being much larger than disposable income, official data showed Sunday, Yonhap reported. According to findings by the Bank of Korea and the Bank for International Settlements, the country’s household debt was equal to 159.8% of disposable income throughout the year. This is a 5.2 percentage point increase from a year earlier. Numbers also showed that despite concerted efforts by the government to rein in the debt incurred by households, these numbers grew at a much faster pace than earnings. Debt ballooned 8.1%, or by 108.3 trillion won ($98.5 billion), in the one-year period, while disposable income moved up 4.5%, or 39.3 trillion won. This trend of household debt growth outpacing earnings has been ongoing since the third quarter of 2014. In addition, the financial debt held by households as outlined in the flow of funds account, showed obligations being 185.9% of disposable income last year. This is a 5.5 percentage point increase from 2016. The Organization for Economic Cooperation and Development said South Korea’s financial debt to earnings ratio grew 11.4 percentage points in 2016—the highest gain among 26 countries checked.