The level of household debt in Asia’s fourth-largest economy rose at the fastest pace among major economies in 2019, data showed Sunday. 

According to the data from the Bank for International Settlements, household debt in South Korea accounted for 95.5 percent of the country’s gross domestic product as of the fourth quarter last year, increased by 1.6 percentage points from a year earlier.

The growth rate ranked first among 43 major economies alongside Hong Kong. Norway came next with 1.0 percentage points, followed by China and Thailand, with 0.8 and 0.6 percentage points, respectively.

Korea saw household debt-to-GDP ratio jump 3.6 percentage point on-quarter, marking the fourth fastest expansion worldwide. 

This year, the country‘s overall private-sector debt is expected to rise twofold or more due to the government‘s lending policies to counter the economic blow from the pandemic, which means the national debt is likely to double the added values that all economic players -- government, businesses and households – would create this year, the officials said. 

Earlier, the Bank of Korea said overall household debt in May came to some 920 trillion won ($759 billion), up 32 trillion won from a previous year, while the total balances of corporate debts rose by some 80 trillion won to reach 945.1 trillion won. Meanwhile, the combined personal debts at five major banks here, including KB Kookmin, Shinhan, Woori, Nonghyup reached about 116 trillion won as of June 17, up some 1.8 trillion won from the end of May.

The mounting household and corporate debts came as the South Korean government in March started to offer grace periods for loan payments to cash-strapped low income families as well as small and medium-sized firms. 

“In times of economic crisis like the coronavirus pandemic, it is inevitable that the government funnel liquidity into local markets, but excessive debts would haunt the local financial markets in the long run, dragging down the country’s economic recovery in the post virus period,” said Cho Young-moo, a researcher at LG Economic Research Institute.

By Choi Jae-hee (cjh@heraldcorp.com)