SEOUL, Jan 13 (NNN-YONHAP) – South Korean finance minister, yesterday warned of economic difficulties this year, due to the so-called three-high phenomenon, including high inflation, high interest rates and high debts.
“This year will likely be very challenging for the entire world, as well as, for (South) Korea, as the effect of monetary tightening in major economies spreads in full swing, amid the prolongation of high inflation, high interest rates and high debts,” Minister of Economy and Finance, Choo Kyung-ho told a press conference with foreign media, in Seoul.
Choo, who doubles as the deputy prime minister for economic affairs, said, the government will focus policy efforts on overcoming the crisis.
The country’s central bank has tightened its monetary policy stance since Aug, 2021, lifting its benchmark interest rate from a record low of 0.50 percent to 3.25 percent.
Fast rate hikes added debt-servicing burden on households, already struggling with high inflation and massive debts.
Debts, owed by households to deposit-taking banks, dwindled 2.6 trillion won (2.1 billion U.S. dollars) in 2022, amid higher lending rates, but the debts spiked 100.6 trillion won (80.9 billion dollars) in 2020, and 71.8 trillion won (57.7 billion dollars) in 2021, to remain near the record-high level.
The government eased regulations on mortgage loans, to prop up the faltering housing market, by allowing potential buyers to purchase new home with borrowed money.
Choo said, the lending regulations had been so excessive, to restrict normal housing transactions for the past years, calling the deregulation a “normalisation.”
The minister added that, the government will keep in place the regulations to prevent excessive mortgage and credit loans.– NNN-YONHAP
