The International Monetary Fund has warned that South Korea’s growing household debt could trigger problems for the country’s economy if interest rates rise.
 
During a conference in Seoul co-organized by the Bank of Korea and the IMF, Ding Ding, a senior economist at IMF Asia and Pacific Department, said that changes in South Korean household debt usually pose no significant risk as they reflect the country’s economic cycle and structure.
 
However, Ding warned that the South Korean economy is still exposed to risk from household debt if interest rates rise as expected.
 
As a possible policy for tackling growing household debt, the IMF researcher advised the South Korean government to focus on easing the vulnerability stemming from rampant credit loans.
 
Ding said the South Korean government also needs to caution against lowering the economic growth if it tries to reduce credit loans in a hurry.