8.3% of corporate debt drives 3.4% growth rate, 30% of real estate loans are in PF ‘bubble’
Corporate debt is growing by 8.3% per year, with nominal growth driving 3.4%, and real estate loans accounting for 30% of corporate debt, with real estate loans accounting for 30% of corporate debt. It appears that a rent price bubble has been created through corporate lending.
The Bank of Korea's report shows that the average annual growth rate of corporate debt is faster than nominal GDP, with the average annual growth rate of corporate debt increasing from 4.3% between 2010 and 2017 to 8.3% between 2018 and 2023, and the average annual growth rate of corporate debt between 2018 and 2023 is 8.3%. The growth rate was only 3.4%, a gap of more than double.
The Bank of Korea's 'Corporate Debt Status and Implications in Korea' revealed on the 20th that corporate debt was 2,734 trillion won at the end of last year, a total increase of 1,036 trillion won since 2018.
The sharp rise in corporate debt occurred in real estate loans, which surged by 301 trillion won between 2018 and 2023, accounting for 29% of the total increase in corporate debt. Accordingly, the ratio of real estate loan balances to nominal gross domestic product (GDP) soared from 13.1% in 2017 to 24.1% in 2023.
The real estate bubble occurred as the ratio of real estate loan balance to nominal gross domestic product (GDP) soared from 13.1% in 2017 to 24.1% in 2023, led by corporate real estate loans and translated into economic growth.
The research team that prepared the report for the Bank of Korea's Financial Markets Department said on this day, "The financial sector's profit-seeking behavior has had a significant impact on the expansion of credit supply to the real estate sector," adding, "Non-bank sectors have been engaging in project financing related to profitable real estate development since the mid-2010s. “Corporate loans, especially PF) loans, have expanded significantly, and loans from Saemaeul Geumgo and mutual finance have increased significantly,” he said, revealing the cause of the real estate surge.
The Bank of Korea said that loans to individual business owners increased from an annual average of KRW 24 trillion (an average annual increase of 10%) between 2017 and 2019 to an average of KRW 54 trillion (an average annual increase of 15%) between 2020 and 2022 due to support for guarantees and loan repayment deferrals for corona-damaged companies. revealed.
The pace of increase in government debt is also accelerating, and Bloomberg Intelligence (BI) reports in its 'Financial Outlook Report' that Korea's government debt-to-GDP ratio, which was around 57%, will rapidly rise to 70% in 2030, exceed 100% in 2045, and reach 120% in 2050. It was announced on the 19th that it would be recorded.
The IMF's estimate of Korea's government debt rose from 42.1% (relative to GDP) in 2019 to 51.3% in 2021, soaring to 55.2% in 2023, reaching 56.6% this year, and reaching 59.4% in 2029, reaching the 60% level. revealed.
Government debt includes the debt of non-profit public institutions in the national debt (government bonds, loans, and treasury debt obligations).