ID :
28021
Sun, 11/02/2008 - 20:17
Auther :
Shortlink :
https://www.oananews.org//node/28021
The shortlink copeid
Korean households' debt repayment capacity weakens: BOK
SEOUL, Nov. 2 (Yonhap) -- South Korean households' ability to repay debt weakened
in the first half of this year as household debt rose at a faster pace than
income growth, the central bank said Sunday, adding to worries over sluggish
consumer spending.
The ratio of households' financial debt to disposable income rose to 1.53 as of
the end of June, compared with 1.48 at the end of 2007, the Bank of Korea (BOK)
said in a semi-annual financial stability report.
The figure has been on an upward trend since 2004, when the ratio stood at 1.27,
according to the central bank.
The ratio of interest payment to disposable income came in at 9.8 percent as of
the end-June, up from 9.4 percent in 2007.
"Amid rising interest rates, household debt rose faster than income or financial
assets, which weakened households' capability to service debt. Such rising debt
could sap consumer spending in the future," the BOK said.
The report came as increasing debt, coupled with higher inflation, is eroding the
purchasing power of households amid the slowing economy and the global financial
meltdown.
The South Korean economy expanded 0.6 percent on-quarter in the third quarter,
the slowest growth in four years, due to sluggish domestic demand and lagging
export growth.
On Oct. 27, the BOK slashed its key interest rate by a record 0.75 percentage
point to 4.25 percent in a bid to keep global financial turmoil from sharply
slowing the real economy. It was the second rate cut in October.
Meanwhile, the BOK was cautious about rising credit risks for smaller firms,
meaning the likelihood of borrowers not repaying a loan or debt.
Loan delinquency rates by small and medium enterprises (SMEs) stood at 0.83
percent as of the end of June, up from 0.69 percent at the end of last year,
according to the BOK.
South Korean lenders, which are suffering from a dollar shortage, have been
increasingly reluctant to extend loans, particularly to smaller firms, amid the
slowing economy.
sooyeon@yna.co.kr
(END)
in the first half of this year as household debt rose at a faster pace than
income growth, the central bank said Sunday, adding to worries over sluggish
consumer spending.
The ratio of households' financial debt to disposable income rose to 1.53 as of
the end of June, compared with 1.48 at the end of 2007, the Bank of Korea (BOK)
said in a semi-annual financial stability report.
The figure has been on an upward trend since 2004, when the ratio stood at 1.27,
according to the central bank.
The ratio of interest payment to disposable income came in at 9.8 percent as of
the end-June, up from 9.4 percent in 2007.
"Amid rising interest rates, household debt rose faster than income or financial
assets, which weakened households' capability to service debt. Such rising debt
could sap consumer spending in the future," the BOK said.
The report came as increasing debt, coupled with higher inflation, is eroding the
purchasing power of households amid the slowing economy and the global financial
meltdown.
The South Korean economy expanded 0.6 percent on-quarter in the third quarter,
the slowest growth in four years, due to sluggish domestic demand and lagging
export growth.
On Oct. 27, the BOK slashed its key interest rate by a record 0.75 percentage
point to 4.25 percent in a bid to keep global financial turmoil from sharply
slowing the real economy. It was the second rate cut in October.
Meanwhile, the BOK was cautious about rising credit risks for smaller firms,
meaning the likelihood of borrowers not repaying a loan or debt.
Loan delinquency rates by small and medium enterprises (SMEs) stood at 0.83
percent as of the end of June, up from 0.69 percent at the end of last year,
according to the BOK.
South Korean lenders, which are suffering from a dollar shortage, have been
increasingly reluctant to extend loans, particularly to smaller firms, amid the
slowing economy.
sooyeon@yna.co.kr
(END)
