South Korean household credit, or credit purchases and loans extended by financial institutions, reached an all-time high of 1,166.4 trillion won ($1.01 trillion) as of September, fueling concerns the country’s household indebtedness is outpacing the economy.
According to the Bank of Korea’s latest quarterly report released Tuesday, household credit in the July-September period grew 3.0 percent, the same as in the previous quarter, when the growth rate hit its highest in 4 1/2 years.
Household debt, which constituted about 94.5 percent of total household credit, stood at 1,102.6 trillion won in the July-September period, up 2.9 percent, or 30.6 trillion won, from a quarter ago. The rate slowed from the 3.1 percent rise of the previous quarter, April to June.
Credit purchases rose to 63.4 trillion won, up 6.6 percent, or 3.9 trillion won, from a quarter ago, marking the largest gain for a third quarter, the data showed.
“More people appeared to have opened their wallets after the country came out of the aftermath of the Middle East respiratory syndrome outbreak and the government‘s package to spur private consumption,” BOK official Shin Sung-wook was quoted as saying by Yonhap News.
Growth in household credit is one of the indicators of economic growth. However, financial experts pointed out that the 7.4 percent growth of household credit in January-September of this year has been too fast for the country’s 3.1 percent annual growth forecast by the BOK.
By Chung Joo-won (email@example.com