South Korea‘s Self-Employed Face Mounting Debt as Q2 Figures Hit Record High
SEOUL, Sept. 25 – Debt carried by South Korea’s self-employed population surged to an unprecedented 1,069.6 trillion won ($746 billion) in the second quarter of 2023, according to data released Sunday by the Bank of Korea (BOK). The significant increase-up 2 trillion won from the previous quarter-signals growing financial strain on small business owners and autonomous workers amid a slowing economy and rising borrowing costs.
This escalating debt burden poses a significant risk to the nation’s economic stability, impacting a crucial segment of the workforce that accounts for a substantial portion of job creation and economic activity. the record-high figures, first tracked by the BOK in 2012, coincide with a parallel rise in loan delinquency rates, particularly among lower-income self-employed individuals, raising concerns about potential defaults and broader economic repercussions.
The BOK data reveals a delinquency rate of 2.07% as of the end of June, the highest recorded in 12 years, marking a 0.15 percentage point increase from the prior quarter. This figure remains below the 2.84% seen in the third quarter of 2013, but the upward trend is prompting calls for proactive intervention.
Last month, the central bank issued a warning regarding the increasing financial vulnerability of the self-employed, emphasizing the urgent need for targeted debt restructuring and policy support. The BOK specifically highlighted the importance of assisting those struggling with prolonged financial hardship exacerbated by high borrowing costs and the sluggish economic climate. the bank’s analysis suggests that focused measures are critical to help thes individuals regain financial footing and prevent further deterioration of the situation.
