Rising global debt and higher rates raise concerns for South Korea's economy
The IMF warned that world public debt is nearing post-World War II highs and that higher interest rates could strain economies, prompting analysis of South Korea’s growing debt burdens.
At the IMF’s annual gathering, Managing Director Kristalina Georgieva highlighted that global public debt is approaching its post-World War II peak and that interest costs now represent a larger share of world GDP. She noted that in advanced economies, lower growth rates no longer allow debt ratios to fall automatically. The piece points to rising bond yields in the United States, Japan and France as signs of tightening financial conditions.
Against this backdrop, South Korea’s sovereign debt is expected to rise above 63% of GDP by 2031, while private sector credit already exceeds 190% of GDP, creating a macro-leverage ratio near 2.5 times GDP. Household debt has hit a new high in won terms, and delinquency rates among vulnerable borrowers have crossed 10%, raising concerns about financial stability amid continued rate hikes.
Why it matters
Higher debt and interest costs could trigger financial stress in South Korea, affecting households and the broader economy.
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