Tag: debt

Here is the life most young South Korean couples have:

Korea’s newlywed couples were burdened with record-high amounts of debt last year while having the least number of babies in history. The number of married couples also decreased by 6.3 percent to 1.03 million in 2022 compared to the previous year, according to Statistics Korea on Monday. 
  
The statistics agency polled the country’s newlyweds whose marriage registration is less than five years old as of November last year.   
  
The median debt for respondents came to 164.2 million won ($124,600), up 7.3 percentage points from a year ago, with 89 percent of the surveyed couples in debt.

More newlyweds in Korea are falling into the category of DINK (Dual Income No Kid). The majority, or 57.2 percent, of the newlyweds have a dual income, up 2.3 percentage points on year. 
  
The proportion of dual-income households is on the decline with many females quitting their jobs to concentrate on child-rearing. 
  
The average income of dual-income couples stood at 84.3 million won compared to a single-income household with 49.9 million won. 
  
As for children, 46.4 percent of the surveyed couples had no child, marking the highest rate since the data was collected.  

Joong Ang Ilbo

You can read more at the link, but racking up records amount of debt before having kids is a sure way to keep the birth rate low because kids will greatly add to expenses. If the Korean government can find ways to relieve the debt crisis they will likely solve the birth rate crisis at the same time.

I guess we will see if President Yoon actually follows through on debt reduction because it easy to say, but as we see with U.S. politicians, it is actually harder to follow through on:

President Yoon Suk Yeol cited reducing the national debt and stabilizing prices as his top priorities in an address to the National Assembly on Tuesday.

“The approach our government is taking in managing our finances is to avoid passing on unaffordable debts to the country’s future generations,” the president said in a budget speech delivered before the members of the Assembly.

“A sound fiscal policy is crucial to stabilizing prices in the long run and protecting our economic security,” the president said, adding that the International Monetary Fund has appraised his administration’s take on balancing the budget as heading in the right direction.

Yoon stressed that a sound fiscal policy was “not just about cutting down on spending, but about using taxpayers’ money more efficiently and responsibly, with efforts to not let a single dime go wasted.” He said that the budget would primarily be spent on strengthening the country’s essential functions such as national defense, education, health care and social security for the vulnerable.

Korea Herald

You can read more at the link.

The Olympics continue to prove to be extremely wasteful and Pyeongchang is the latest example:

Gangwon Province is mired in massive debts after hosting the Winter Olympics in Pyeongchang earlier this year.

The mountainous province with a population of 1.5 million had to host the biggest Winter Olympics so far, and six months on conflict with locals and unpaid wages continue to plague the local government, while the astronomically expensive venues sit empty.

The biggest headache is what to do with the speed skating rink, ice hockey center and Alpensia Sliding Center that have proved a bottomless pit of maintenance costs.

The province has to fork out W20.3 billion until 2022 just to keep the facilities running, but nobody knows what will happen afterwards (US$1=W1,109). Gangwon Province has asked the National Assembly to have the central government take on 75 percent of the upkeep costs, but the central government refused since it could set a bad precedent for allocating state funds.

The alpine skiing venue in Jeongseon, which was built on a 101-hectare piece of land owned by the Korea Forest Service, faces demolition. The government footed 75 percent of the W203.4 billion cost of building it and Gangwon Province the rest. A precondition was to return the land to the government after the Winter Olympics, but now locals want to keep it, hoping that the facility can generate income for the remote province.

Environmentalists and the KFS insist it must be demolished and the forest restored.  [Chosun Ilbo]

You can read more at the link.

2/3 of Koreans are in Debt https://t.co/QcZg2TPsEy pic.twitter.com/NLt2DK2vF3

— The Chosun Ilbo (@EnglishChosun) March 17, 2017

I have always thought that South Korea is sitting on a massive real estate bubble considering all of its empty apartments that so many people have borrowed money invested in.  According to this article the debt problems in South Korea is far worse than just the real estate market:

One of the important aspects that gets missed about Korean exports is their overall lack of diversity. About 48 percent of all Korean exports consist of electronics and related components while 31 percent are transportation goods (cars, boats, and related parts). A game-changing shift in the playing field for any product area could spell a slow but steady downward spiral for the entire Korean economy. Even a 10 percent drop in exports would literally shrink the economy by 5 percent, costing tens of thousands of jobs that ultimately depend on export revenue, exacerbating the already high underemployment rate of 14 percent and youth unemployment rate of 9 percent.

With a retinue of Chinese firms like Huawei and Oppo hot on the heels of Samsung, a potential decline becomes even more plausible considering the fact that Korean corporate culture is not always the most favorable for fostering the development of next-generation ideas and technology, often the easiest (and sometimes only) way for technology companies to remain competitive. This lack of forward thinking is most striking in the clean energy field, where Korea has been completely left out of the latest developments, despite its global reputation for being a technology powerhouse.

Another key area of concern is corporate debt. South Korea’s total corporate debt is worth about 171 percent of its GDP. Although this high percentage is not unique to Korea (the U.S. and China have about 304 percent and 169 percent, respectively), Korea is more susceptible to adverse consequences for a number of reasons. The first is the high prevalence of “zombie companies,” corporate entities that have been unable to repay debt for at least three years running. It is estimated that about a quarter of all Korean corporate debt is held by zombie companies, unlikely to ever be repaid.  [The Diplomat]

You can read more at the link.

South Korea is really a housing bubble burst away from a major recession considering all the debt that people have tied up in their homes:

Record high household debt, including credit cards, edged closer to 1,090 trillion won ($994.3 billion) in December largely due to the central bank’s cut in the benchmark interest rate.

The Bank of Korea reported on Thursday that household debt at the end of December was 1,089 trillion won, a 2.8 percent increase from the previous record of 1,059.2 trillion won in the third quarter of 2014. When compared to the end of 2013, household debt expanded 6.6 percent from 1,021.4 trillion won.

Overall household debt has set records for seven consecutive quarters.(………………)

“The household debt to disposable income ratio, which is an indicator of households’ debt burden, at the end of 2013 was 160.7 percent, which is relatively high compared to major advanced economies, including the United States,” said Kim Yong-beom, director general of the financial policy bureau at the Financial Services Commission. “But the financial debt to financial asset ratio is holding steady at 46 percent. The government has been making persistent efforts to reform the structure of mortgage loans.”  [Joong Ang Ilbo]

You can read more at the link.