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Household debt burden becomes heavier over past 5 years

All News 09:35 January 10, 2018

SEOUL, Jan. 10 (Yonhap) -- South Korea's household debt burden has become heavier over the past five years as debt repayment grew faster than disposable income, government data showed Wednesday.

The average disposable income of a household with debt obligations rose 19.1 percent from 2011 to 47.42 million won (US$44.317) in 2016, according to the data.

Between 2011 and 2016, the repayment of interest and principal jumped 71.1 percent to 15.18 million won.

Although there is little risk that household debt may spark a financial crisis, rising debt chokes off private consumption and makes it difficult for the central bank to raise its key rate amid global monetary tightening.

Household debt burden becomes heavier over past 5 years - 1

Last September, South Korea's household debt stood at 1,419.1 trillion won.

On Nov. 30 last year, the Bank of Korea raised its key interest rate for the first time in more than six years, citing a robust economic recovery.

Hong Joon-pyo, a researcher at the private Hyundai Research Institute, urged the government to implement policies that would encourage companies to increase hirings, to address concerns over household debt.

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