Household debt continues to climb slowly

The growth of Korea’s household debt has slowed for the fifth straight quarter, but hit a fresh record high this year amid the government’s stricter lending rules, according to the Bank of Korea (BOK) on Wednesday.

The country’s outstanding household debt jumped to a record 1,468 trillion won ($1.36 trillion) in the January to March period, up 8 percent from a year earlier, preliminary data by the Bank of Korea showed.

The on-year growth rate has been declining since it hit 11.6 percent in the fourth quarter of 2016. The 8 percent gain is the lowest since the first quarter of 2015, when it was 7.4 percent.

From a quarter earlier, household credit - which is composed of household loans and credit card spending - rose 17.2 trillion won on-quarter in the first quarter, compared with a 31.6 trillion won expansion in the previous three-month period.

The government tightened lending rules as part of its effort to curb ever-growing household debt, which economists fear could dampen consumer spending going forward and hold up growth.

The latest data came a day before the BOK is set to hold its rate review session. The central bank is likely to keep the rate unchanged on Thursday due to some signs of an economic downturn in employment and low inflation pressure.

Recently, BOK Gov. Lee Ju-yeol said the Korean economy faces strong headwinds in the coming months, saying, “It has become hard to be optimistic.”

Yonhap