Korea debt

Korea's debt-ridden households

Korean households continue to borrow at rates normally associated with the UK and US while inflation rises, creating a dilemma for the country's central bank.
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South Koreans' usage of credit cards as a percentage of total consumption reached 54.9% in the first half of 2010 (AFP)
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<div style="text-align: left;"> South Koreans' usage of credit cards as a percentage of total consumption reached 54.9% in the first half of 2010 (AFP) </div>

Korea’s central bank continues to stand in splendid isolation among its peers in the region. Inflation is rising, yet it declines to hike interest rates. The reason probably lies in the country’s propensity to borrow rather than save another exception to the Asian rule.

Korean households have now amassed W801.4 trillion $738 billion of debt, gearing up by W6 trillion in the first quarter of this year, according to a Bank of Korea BoK statement on Wednesday. The trend has been defiantly upward for some time less than three years ago it broke the W500 trillion barrier.

The ratio of debt-to-disposable income was 157% last year,...

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