Acting Chief Choi F4 Leads "Household Debt Management Plan to Be Announced This Month"

Government Holds Macroeconomic and Financial Issues Meeting

Yonhap News

Choi Sang-mok, Acting President and Deputy Prime Minister as well as Minister of Economy and Finance, announced on the 21st that "the household debt management plan for this year will be finalized and announced within this month."

On the same day, Acting President Choi presided over the 'Macroeconomic and Financial Issues Meeting' (F4 meeting) at the Government Seoul Office and stated, "Although household debt is being managed stably, it is necessary to be cautious so that it does not increase again due to recent expectations of interest rate cuts."

The meeting was attended by Lee Chang-yong, Governor of the Bank of Korea, Kim Byung-hwan, Chairman of the Financial Services Commission, and Lee Bok-hyun, Governor of the Financial Supervisory Service, among others.

Acting President Choi mentioned, "We will continue to consistently manage the growth rate of household debt within the range of the nominal growth rate (3.8%) so that the household debt ratio stabilizes at around 80%, which is evaluated as not imposing a burden on the national economy."

The Bank of Korea and others assess that when the household debt ratio relative to GDP exceeds the 80% level, the negative impact on growth trends increases.

The household debt ratio relative to GDP has increased for 17 consecutive years since 2004, especially surging during the COVID-19 pandemic period, reaching 98.7% at the end of 2021, and has been pointed out as a potential risk to the Korean economy.

Participants evaluated that "due to the shift to a high interest rate stance since 2022, household debt has been managed stably despite difficult conditions, with the ratio expected to be in the low 90% range (90.5% as of April), close to the pre-pandemic level (89.6% in 2019), marking three consecutive years of decline."

The meeting also discussed the impact on domestic and international financial and foreign exchange markets and the direction of response.

Acting President Choi urged, "Although volatility in domestic and international financial markets has somewhat eased recently, external uncertainties remain, so we will maintain a joint 24-hour monitoring system with related agencies with a high level of vigilance."

The previous day, the won-dollar exchange rate closed at 1,437.9 won, down 0.6 won from the previous session in weekly trading, influenced by U.S. President Donald Trump's mention of a trade agreement with China.

The KOSPI and KOSDAQ indices turned down after eight trading days due to profit-taking following recent gains. The KOSPI index closed at 2,654.06, down 0.65% from the previous session, and the KOSDAQ index closed at 768.27, down 1.28%.

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