OECD says to lower household debt

While praising the Korean government’s three-year economic innovation plan, the Organization for Economic Cooperation and Development said the Korean economy is still facing challenges of high household debt and a vulnerable real estate market.

In a biannual country report on Korea released yesterday, the OECD said the Korean government is trying to solve the problem of high household debt by encouraging people to take out loans from the National Housing Fund. But despite the attempts, the report said, “The economy is suffering difficulties due to high household debt and fragile real estate conditions.”

“Investments in the housing market picked up slightly since last year, but the level is much lower than in the past,” the report added.

Despite the problems, the organization forecast the Korean GDP would grow 4 percent this year, largely due to improving global trade conditions, which will lead to more investment by Korean companies in the future.

“The Park Geun-hye government’s three-year economic innovation plan is a comprehensive plan with bold structural reforms and the president’s strong will to engage in it will help the possibility of success,” the report said.

The report said that further appreciation of the won would help the country strike a balance between exports and imports.

BY song su-hyun [ssh@joongang.co.kr]