March 21, 2025
SEOUL – South Korea’s total debt — comprising household, corporate and government obligations — rose by 4 percent in the third quarter of last year, surpassing 6.2 quadrillion won ($4.24 trillion), according to data from the Bank for International Settlements released on Thursday. The figure amounts to 2.5 times the country’s gross domestic product.
A screenshot of a graph published by the Bank for International Settlements. GRAPH: BIS/THE KOREA HERALD
By the end of the third quarter of last year, Korea’s non-financial sector credit reached 6,222 trillion won, up 4.1 percent compared to the same period the previous year, and a rise of 0.9 percent from the previous quarter.
Non-financial sector credit, often referred to as total debt, encompasses the total amount of outstanding debts held by households, non-financial businesses and governments, excluding the financial sector. This measure is based on financial circulation statistics and is used for international comparisons of credit levels among countries.
Total debt surpassed the 5,000 trillion won mark for the first time at the end of the first quarter of 2021 amid the COVID-19 pandemic, and it has continued to rise, exceeding 6,000 trillion won by the end of the fourth quarter of 2023.
Of the total debt of 6,222 trillion won, government debt accounted for 18.3 percent, which is smaller than the borrowings of companies and households, yet it has shown the fastest growth rate among these categories.
Government debt surged to 1,141 trillion won, reflecting an annual increase of 11.8 percent, while corporate and household debts increased by 2.9 percent and 2.1 percent, respectively.
The growth of the total debt-to-GDP ratio has slowed. At the end of the third quarter of last year, it stood at 247.2 percent, the lowest level since the end of the second quarter of 2021, when it was 247 percent. The ratio peaked at 252.9 percent at the end of the second quarter of 2023 and has been falling for five consecutive quarters.
Additionally, the ratio of corporate debt to GDP has decreased for four consecutive quarters, reaching 111.1 percent, while the household debt ratio also fell from a year earlier to 90.7 percent, marking the lowest level since the end of the first quarter of 2020.
In separate data released by the Institute of International Finance on Sunday, Korea’s household debt-to-GDP ratio was the second highest among major countries in the fourth quarter of last year.
The debt-to-GDP ratio reached 91.7 percent at the end of the fourth quarter of 2024, placing Korea second among 38 major countries, with Canada leading at 100.6 percent.
Korea significantly exceeded the overall emerging market average of 46 percent and the global average of 60.3 percent.