Indebted households and the projected pace of aging in South Korea are worrisome, raising an urgent need for the country to develop households’ financial systems and access, a report showed Wednesday.

Korea had the highest household debt to gross domestic product ratio among 10 Asian countries analyzed in 2016, according to the Allianz Global Wealth Report 2017 released by the German insurance giant.

The debt ratio of Asia’s fourth-largest economy came to 95.8 percent, much higher than the average of 10 Asian countries -- China, India, Indonesia, Israel, Japan, Korea, Malaysia, Singapore, Taiwan and Thailand -- which stands at 50.2 percent.

Korea also saw 10 percent private debt growth in 2016, the second-fastest following India’s 13.5 percent. But the two-digit figures cannot be perceived as the same, the report said.

“While this could be classed as ‘catching up’ in the case of India (and in the case of China), the sustained strong growth in liabilities in South Korea is somewhat worrying in view of the country’s debt,” read the report.

Per capita liabilities in Korea came to 24,200 euros ($25,400) in 2016, also the second-largest following Singapore’s 36,075 euros.

Debt accounted for 46.2 percent of gross financial assets of private households in Korea, causing its gross financial asset per capita of 52,380 euros to shrink by half. The debt-to-asset ratio was also the second-highest following Malaysia, whose private debt per capita was about 30 percent of Korea’s at 7,360 euros.

The report also noted Korea would face rapid aging over the next 20 years. Koreans are also relying on life insurance policies and pension funds in asset management.

In Korea, the old age dependency ratio -- or the number of people aged over 65 as a percentage of those aged between 15 and 64 -- is expected to rise from 18 percent in 2016 to just under 47 percent in 2035. Meanwhile, 32 percent of Koreans’ gross financial assets went to insurance and pensions, nearly double that of Asia’s average.

“The question arises of whether all households will manage to save sufficient assets before they reach pensionable age,” said the report, while stressing “an urgent need for (Korea) to catch up in terms of development of financial systems and access to appropriate financial services.”

By Son Ji-hyoung 
(consnow@heraldcorp.com)