Arab Today, arab today south korean households mired in debt
Last Updated : GMT 08:20:02
Arab Today, arab today
Arab Today, arab today

South Korean households mired in debt

Arab Today, arab today

Arab Today, arab today South Korean households mired in debt

Seoul - AFP

Lee Sang-Kuk delivers meat during the day and drives drunk businessmen home at night, but even with two jobs he and millions of other South Koreans are struggling against a tide of household debt. Lee\'s situation is increasingly common in South Korea where total household borrowing hit a record 937.5 trillion won ($882.7 billion) in September last year, equivalent to more than 70 percent of the country\'s 2011 GDP. Laid off from his job in a media company in 2000, Lee opened a restaurant with a bank loan using his home as collateral. Within two years the business had collapsed forcing him to apply for personal bankruptcy. Lee sold his house to clear the bank loan but then took out a high-interest loan from private lenders to fund the education of his son and daughter. \"Since then, life has been miserable,\" said the 59-year-old who confessed to contemplating suicide at one point. \"Everything I earn goes on debt repayment, and my wife works as a housemaid to meet our living expenses,\" he told AFP. Lee\'s evening job is for an agency which provides emergency drivers, mostly for businessmen who have had too much to drink and need someone to drive them, and their cars, home. South Korea\'s household debt mountain has its origins in financial reforms introduced after the 1997 Asian financial crisis that led the country\'s banks to turn to consumers for asset growth. A resulting surge in mortgage lending was fuelled by a long streak of low interest rates and a general belief that real estate was a guaranteed investment. \"While US households deleveraged, especially after the subprime mortgage crisis, loan demand for mortgages increased here thanks to rising property prices,\" Hyundai Economic Research Institute analyst Lee Jun-Hyup said. \"There\'s no serious threat to the banking system, but obviously it hurts domestic consumer demand,\" Lee said. Once an economic juggernaut that grew nearly 7.0 percent a year on average since the end of the Korean War in 1953, South Korea has, in recent years, entered a phase of more measured growth. The property market has slumped and a slowing economy has resulted in job losses that have left single wage-earner families struggling to stay afloat. Some government estimates have put the number of those at high default risk at more than 6.0 million -- or more than 10 percent of the population. Those with children of school age have the added burden of the crippling costs of extra-curricular education which is considered a pre-requisite of college entry in a hyper-competitive system. According to Korea University professor Lee Phil-Sang, the quality of household debt is deteriorating due to an increase in the debt servicing burden of self-employed people, who make up almost a third of the workforce. At the same time, there has been a steady rise in low-income families who are borrowing just to meet living expenses. \"Household debt is like a cancer in our body,\" Lee said. \"If unchecked, it\'s going to become a serious drag on the economy because loan repayments will worsen rapidly during a time of economic stress,\" Lee said. The lack of disposable income among highly indebted households is hampering government efforts to spur domestic demand and wean the national economy off its over-reliance on exports. Like Lee Sang-Kuk, many middle-aged South Koreans laid off by corporations take out personal and mortgage loans to start a new business. But commercial banks favour high-income retail consumers, pushing poorer borrowers to lenders such as savings banks and credit card firms that charge punitively high interest rates. Lee is among an estimated group of three million people who have been blacklisted by banks or cannot get extra loans because of low credit ratings. As part of her election pledge to expand social welfare spending, president-elect Park Geun-Hye proposed a 18 trillion won ($16.9 billion) public fund to help low-income earners like Lee reduce debts. Opposition politicians and some experts say such a fund would be little more that a stop-gap policy and have urged Park to look at a longer-term solution. Others like Financial Services Commission chief Kim Seok-Dong, have voiced reluctance at the message that would be sent by using taxpayers money to rescue indebted households.

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today south korean households mired in debt Arab Today, arab today south korean households mired in debt

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today south korean households mired in debt Arab Today, arab today south korean households mired in debt

 



Arab Today, arab today
Arab Today, arab today Youssra depended on colored foam

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today Second US judge orders freeze

GMT 08:04 2017 Thursday ,19 October

Second US judge orders freeze
Arab Today, arab today Etiquette expert underlines importance of gifts

GMT 17:52 2017 Sunday ,03 September

Etiquette expert underlines importance of gifts
Arab Today, arab today Fighters celebrate Raqa victory

GMT 06:07 2017 Wednesday ,18 October

Fighters celebrate Raqa victory
Arab Today, arab today Hiring not part of Alibaba pledge

GMT 11:26 2017 Wednesday ,18 October

Hiring not part of Alibaba pledge
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Sidem reveals plan to improve education

GMT 15:52 2017 Friday ,06 October

Sidem reveals plan to improve education
Arab Today, arab today British actress becomes fifth woman

GMT 18:15 2017 Monday ,16 October

British actress becomes fifth woman
Arab Today, arab today Climate-disrupting volcanoes helped topple

GMT 16:00 2017 Wednesday ,18 October

Climate-disrupting volcanoes helped topple
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Mercedes says recalls 400,000 UK cars

GMT 06:56 2017 Tuesday ,17 October

Mercedes says recalls 400,000 UK cars
Arab Today, arab today Britain's Vauxhall to cut 400 jobs

GMT 10:53 2017 Sunday ,15 October

Britain's Vauxhall to cut 400 jobs
Arab Today, arab today Hussein Fahmy happy for honoring in festival

GMT 07:47 2017 Tuesday ,17 October

Hussein Fahmy happy for honoring in festival
Arab Today, arab today Three killed, 360,000 without power

GMT 05:11 2017 Tuesday ,17 October

Three killed, 360,000 without power

GMT 09:31 2017 Monday ,16 October

Dalal Abdel Aziz happy for “Seventh Neighbor”

GMT 10:37 2017 Thursday ,12 October

Cara Delevingne accuses Weinstein

GMT 16:53 2017 Saturday ,02 September

Mai importance of gifts during Eid Al-Adha

GMT 18:49 2017 Monday ,16 October

India to close colonial-era military farms

GMT 10:46 2017 Saturday ,05 August

Nanis reveals simple ideas for home renovation

GMT 23:42 2017 Monday ,16 October

Better Marriages Make

GMT 06:52 2017 Monday ,16 October

Airbus CEO says won't cling to job

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 03:59 2017 Sunday ,15 October

US mobile carriers Sprint, T-Mobile to merge

GMT 11:37 2017 Saturday ,12 August

Fashion designer reveals her new collection
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday