South Korea's household debt: Gangrene on the wound of political chaos

After a failed coup and impeachment, the gangrene of household debt, a more volatile global economy, and political extremism is spreading.

South Korea’s growing household debt has reached levels that present a significant risk in the context of increasing global economic uncertainty. Household debt in South Korea is among the highest in the world relative to GDP, reflecting years of low-interest rates and easy access to credit. While this has supported consumption and real estate investment, the current global economic environment—characterized by interest rate uncertainty, persistent inflation, and geopolitical tensions—places immense pressure on heavily indebted households and increases exposure to the global economy.

The global economy’s shifting landscape poses an immediate threat to South Korea’s economic resilience. Rising global interest rates are increasing debt-servicing costs, reducing household disposable income and constraining domestic consumption. As major economies, including the U.S. and the European Union, face slower growth, and the potential for protectionism and trade tension increases, the demand for…