South Korean Finance Minister Warns There Will Be Global Economic Difficulties in 2023

JAKARTA - South Korea's finance minister on Thursday warned of economic difficulties this year due to the so-called triple high phenomenon, including high inflation, high-interest rates, and high debt.

"This year is likely to be very challenging for the rest of the world and also for (South) Korea as the effects of monetary tightening in major economies spread amid continued high inflation, high-interest rates, and high debt", Minister of Economy and Finance Choo Kyung- ho said at a press conference with foreign media in Seoul, quoted from Antara, Friday, January 13.

Choo, who also serves as deputy prime minister for economic affairs, said the government would focus policy efforts on tackling the crisis.

The country's central bank has tightened its monetary policy stance since August 2021, raising its benchmark interest rate from a record low of 0.50 percent to 3.25 percent.

The rapid increase in interest rates is adding to the debt servicing burden on households that are already struggling with high inflation and heavy debt.

Debt owed by households to deposit-taking banks shrank by 2.6 trillion won (US$2.1 billion) in 2022 amid higher lending rates, but debt jumped 100.6 trillion won (80 .9 billion US dollars) in 2020 and 71.8 trillion won (57.7 billion US dollars) in 2021 remain near record highs respectively.

The government relaxed mortgage lending regulations to shore up the faltering housing market by allowing potential buyers to buy new homes with borrowed money.

Choo said lending regulations had gone too far to limit normal housing transactions over the past few years, calling deregulation "normalization".

Minister of Finance added the government will continue to enforce regulations to prevent mortgage loans and excessive credit.