Growing Debt Burden Due to COVID-19... Service Industry Loans Reach Record High

Increase in Service and Manufacturing Loans... "Due to Increased Funding Demand from COVID-19"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Due to the downturn in business caused by the novel coronavirus infection (COVID-19), debt in the service sector, which has many self-employed individuals, has increased to an all-time high. The total loan amount by industry also showed the largest increase since statistics began in 2008.

On the 2nd, the Bank of Korea announced the industrial loan amounts by deposit-taking institutions for the first quarter of 2020. Industrial loans refer to money borrowed by companies, public institutions, and the government, including individual business owners (self-employed), from financial institutions that handle deposits such as banks, mutual savings banks, mutual finance, credit cooperatives, and Saemaeul Geumgo.

The outstanding loan balance in the service industry reached 34 trillion won, an increase of 11.3 trillion won compared to the end of last year. This represents a 13.0% increase compared to the same period last year. Both the amount and rate of increase are the largest since the industry statistics began in 2008.

The Bank of Korea stated, "This is due to the worsening business conditions caused by COVID-19," and added, "The scale of loan increases expanded due to companies' efforts to secure funds."

The outstanding loan balance in the manufacturing industry was 14.8 trillion won, with a significantly expanded increase, and the construction industry also turned to an increase of 1.4 trillion won.

Meanwhile, the total industrial loan amount of deposit-taking institutions in the first quarter was 1,259.2 trillion won, an increase of 51.4 trillion won compared to the end of the previous quarter. Compared to the previous quarter, it increased by 24.1 trillion won, greatly expanding the scale of the increase.

This content was produced with the assistance of AI translation services.