The ratio of household debt to income for Korea's citizens has reached 1.7 times. Recently, this ratio has been declining as income has been increasing more rapidly than household debt, but it remains significantly high compared to major countries.
According to data submitted to the Strategy and Finance Committee by Representative Cha Gyu-geun of the Rebuilding Korea Party on the 15th, the ratio of financial liabilities to disposable income for households and nonprofit organizations in Korea reached 174.7% at the end of last year. Disposable income was tallied at 1,356.5 trillion won, and financial liabilities totaled 2,370.1 trillion won.
Disposable income refers to the net disposable income, which is calculated by deducting mandatory expenditures such as taxes and social insurance premiums, as well as loan repayments from the total income of households and private nonprofit organizations, including small businesses. Financial liabilities are figures from the Bank of Korea's funds circulation statistics, indicating the scale of non-consolidated household liabilities evaluated at market prices.
The ratio of household debt to income skyrocketed from 182.9% at the end of 2020 to 194.4% at the end of 2021, then gradually decreased to 191.5% at the end of 2022, 180.2% at the end of 2023, and 174.7% at the end of last year.
Looking at the scale of household liabilities, it increased by 2.3% from 2,316.9 trillion won at the end of 2023 to 2,370.1 trillion won at the end of last year. However, income rose from 1,285.8 trillion won to 1,356.5 trillion won, a 5.5% increase, thereby reducing the debt ratio.
Korea's household debt ratio is among the highest among Organisation for Economic Co-operation and Development (OECD) member countries. According to OECD statistics, the household debt ratio to income for Korea at the end of 2023 is 186.5% (provisional). Only five countries exceed this ratio among the 32 OECD member countries: Switzerland (224.4%), the Netherlands (220.3%), Australia (216.7%), Denmark (212.5%), and Luxembourg (204.4%).
Korea comfortably surpasses major countries such as the United States (103.4%), Japan (124.7%), Germany (89.0%), the United Kingdom (137.1%), France (121.4%), and Italy (82.0%).