Korea's Growing Debt Problem


A TV plays in the background while Gi-Hun gets a new haircut. Financial concerns are growing in Korea and household debt is growing as a share of GDP. South Korea has one of the highest debt-to-GDP ratios in the world and the highest in Asia. Debt isn't necessarily a bad thing because it can be used to increase growth and keep the economy functioning. Rapid debt growth, however, can be dangerous. There is a tradeoff between the short-term benefits of taking on more debt as a country and the medium-term costs of rising debt. In the short term, an increase in the debt ratio can help economic growth and employment, but after a few years, those effects can be reversed. Growth may be slower than it otherwise would and the likelihood of a financial crisis increases.

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