The ratio of household, corporate and government debt to South Korea’s gross domestic product (GDP) was 251.3% at the end of last year, up 8.6 percentage points from the end of 2020, when the country was hit by the COVID-19 pandemic. Meanwhile, the global average debt ratio fell sharply by 40.3 percentage points during the same period, from 285.4 percent to 245.1 percent. At a time when many countries around the world are trying to reduce excessive debt after going through a period of high interest rates, South Korea is the only one that has chosen to “run the debt in reverse” and is being criticized for missing the golden time for deleveraging. South Korea’s economic entities, including households, companies, and the government, are simultaneously mired in debt. Amid rising prices and a sluggish economy, households and the self-employed and small business owners continue to depend more on credit. A government that collects less and spends more than it taxes will increase its debt by issuing bonds. The problem is that when it’s time to tighten your belt, taking the easy way out and increasing debt can have the effect of prolonging the pain. The aftereffects of driving the wrong way are already starting to become apparent. The government’s finances posted a deficit of 103.4 trillion won in the first half of this year. Although the deficit is large, 66 percent of the annual budget was spent in the first half of the year, meaning there is a lack of ammunition to deal with the shrinking domestic demand in the second half of the year. A combination of policies that encourage borrowing, such as the expansion of low-interest rate policy loans and the postponement of the introduction of lending restrictions, has led to a sharp increase in lending to households. Unstable housing prices and household lending prevented the Bank of Korea from lowering its base interest rate last week, forcing it to keep it unchanged for a year and seven months. After the COVID-19 pandemic, repayments of principal and interest on loans to self-employed and small business owners were extended without any consideration for distinguishing between good and bad, giving rise to many zombie businesses. It is now becoming increasingly difficult to escape the debt trap without taking almost drastic measures. The financial authorities will implement a “total lending limit” that will reduce the amount of new loans next year for banks that have made more loans to households this year than originally planned. In order to control the increased lending caused by the failure of government administration, stronger government administration will be mobilized. The comprehensive lending controls have made it inevitable that those who actually need loans and have no connection to housing speculation will suffer damage. In response to the government’s statement that it is regrettable to keep interest rates unchanged, given that it must take responsibility for the rapid increase in debt, Bank of Korea Governor Lee Chang-yong harshly admonished the government, saying, “There has been a lack of reflection on why the government has fallen into such structural problems that it is hesitant to lower interest rates.” He said the current state of household debt is “at a level that could lead to a financial crisis.” It now seems difficult to overcome the crisis caused by excessive debt unless all economic entities share the pain. Posted August 29, 2024 09:12, Updated August 29, 2024 09:12 ※Related thread The Korean economy is “definitely recovering. “The world is now paying attention to our competitiveness and growth momentum,” said President Yoon. [8/29] [Bird★] The Fed chairman announced a change in monetary policy, but South Korea’s debt exceeds 3,000 trillion won (325 trillion yen) [8/26] [Bird★] Previous thread [Dong-A Ilbo editorial] The South Korean economy is besieged by debt, and choosing the easy way will prolong the pain [8/29] [Masked Unida★].
Japan is supporting Korea for its own sake. The Korean and Japanese economies are already one and the same, so the decline of the Korean economy is synonymous with the collapse of the Japanese economy. Japan’s only way to survive is to treat Korea as if it were its own country and provide careful support.
>>4 We’re not so dependent on each other’s economies that we have to depend on them for our survival, and our economies are on a different scale. The best way to do this would be to cut it off cleanly, as this would cause the least damage to Japan.
After the war, Korea was the poorest country in East Asia, and the Japanese government, unable to bear the situation, provided all kinds of support and aid to save the Korean economy and society. Without Japan by its side, Korea’s development would be unthinkable, and it would probably have become a slave to China again.
There is an easy way to be saved from this world, but this cursed cycle of reincarnation has been blessed by the Firebird, and even death is meaningless for these people who have been destined to die.
>>32 Of course, the lower class citizens either threw themselves into the Han River or covered themselves in charcoal briquettes, and the nouveau riche at the top fled the country.
>>33 After the Asian currency crisis, many countries signed currency swap agreements to lend dollars in emergencies, but no country has actually used them. If a developed country aiming to join the G7 were to receive dollars from a declining country like Japan, it would be a world first lol.
It’s probably because they continue to produce Korean content and other content that is in the red. The minimum wage has been raised, and both foreign and domestic demand are sluggish.
The IMF has said it won’t lend us any more money, and Kishida, who we rely on, is about to step down. Korea has no choice but to hope that Ishiba will become prime minister.
>>40 The Korean economy has expanded unnecessarily 2015 IMF Korean economy stress test (final review) The funds needed in the event of the Korean economy collapsing are more than 150 trillion yen in emergency loans alone ← now it’s even more ↓ The IMF will not be able to provide support unless Japan provides funds because they will be short of funds.
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