Friendly Economy, this week with reporter Kwon Ae-ri. Reporter Kwon, today (20th) is not about household debt, but about corporate debt. Our corporate debt is the fastest growing in the world in recent years?
Yes, it's the fastest level.
A comparative analysis of global debt levels in the third quarter of this year came out at the end of last week from the World Finance Association.
It has been calculated that the amount of corporate debt in Korea and the debt owed by Korean companies exceeds 126% of the GDP and gross domestic product of Korea.
A total of 34 countries were surveyed. The European Union is just one country, and there are 34 of them.
Among them, only Hong Kong and China had more corporate debt as a percentage of GDP than our companies.
In the last two quarters, Korea was ranked fourth overall.
In the second quarter alone, Singaporean companies had more debt than we did.
But in just one quarter, our corporate debt-to-GDP ratio increased by 5.2 percentage points, surpassing Singapore.
In the first three months of the third quarter, only Malaysia saw corporate debt grow faster than that.
In the past one year, the debt of Korean companies has increased faster than that of Russian and Chinese companies.
After Russia, which has been waging an all-out war with Ukraine for almost two years, and China, which has been under economic sanctions since the lifting of COVID lockdowns, South Korea has been worried about its economic downturn and massive debt.
Interest rates have risen so much that it will be a bit difficult for companies to borrow large sums of money, so why has there been such an increase in loans?
In fact, over the past year, only nine of the 34 countries compiled by the International Finance Association have had higher corporate debt than before, including ours.
In the U.S., which is the only economy in the world in recent years, and in Japan and Singapore, where corporate debt ratios are similar to ours or higher, companies have been reducing their debt considerably over the past year.
When companies borrow a lot of money, it can mean that they are more likely to invest, but when interest rates are so sharply high, as they are now, they tend to borrow and pay back less where they can afford it.
In particular, it is a well-known fact that our economy as a whole has suffered this year, and the fact that corporate debt has increased at a rapid pace is a testament to the fact that many companies have been struggling to borrow money.
In fact, the International Finance Association has compared the growth rates of corporate defaults this year for 17 economies in particular.
The growth rate of corporate defaults in our economy is 40% compared to last year, the second highest growth rate after the Netherlands.
In Korea, it is clear that the delinquency rate of corporate loans is also rising again.
Delinquency rates at large companies have not risen. It's much better than it was right after COVID or in 2021.
The problem is small and medium-sized businesses and sole proprietors.
The delinquency rate is again similar to or higher than it was during the difficult years of 2020, the first year of the pandemic.
a company wants to ease its debt burden even a little, it will ultimately depend on its performance. What does the outlook look forward to?
many things that need to be improved, but basically, exports should be good and domestic demand should be stimulated, so that companies can afford to reduce their debt burden.
However, if you look at exports, it is difficult to expect much for the time being because the global economy is not good.
Still, the fact that the semiconductor economy, our flagship item, is slowly reviving, and that China, which accounts for a large share of our exports, continues to try to stimulate the economy is a hopeful part of the outlook for next year.
The problem is domestic demand.
As the real income of Koreans has been declining in recent years, real consumption has also been decreasing, and household debt is adding to the burden.
Household debt is so large that money is not circulating well, and this is one of the biggest worries of our domestic demand right now.
According to the International Finance Association's report, out of 34 economies in the world, we were the only country with household debt exceeding 100% of GDP.
However, unlike businesses, households' debt to GDP is 4.6 percentage points lower than a year ago.
However, with household debt rising rapidly again in recent years, there is great concern that this may only be temporary.
We need to manage the size of our household debt well in order to lay the foundation for our economy to run smoothly in the long run.
[Economy Friendly] "Survive on debt" ... Corporate debt is among the highest in the world
Highlights: The amount of corporate debt in Korea and the debt owed by Korean companies exceeds 126% of the GDP and gross domestic product of Korea. Only Hong Kong and China had more corporate debt as a percentage of GDP than our companies. In just one quarter, our corporate debt-to-GDP ratio increased by 5.2 percentage points, surpassing Singapore. In the past one year, the debt of Korean companies has increased faster than that of Russian and Chinese companies. The growth rate of corporate defaults in our economy is 40% compared to last year.
Friendly Economy, this week with reporter Kwon Ae-ri. Kwon, today is not about household debt, but about corporate debt. Our corporate debt is the fastest growing in the world in recent years? Yes, it's the fastest level.