South Korea’s national debt is on track to reach nearly 60% of its gross domestic product (GDP) by 2030, as per government data released on Sunday. The debt-to-GDP ratio was at 49% last year, showing a 3% increase from the previous year. This rise in debt is the largest annual gain in five years, following a significant surge in 2020 due to the impact of the COVID-19 pandemic.
The national fiscal management plan projects a steady increase in the debt-to-GDP ratio over the coming years. It is estimated to climb from 51.6% in 2026 to 58% in 2029. Observers suggest that this increase could accelerate further if economic growth slows down or fiscal pressures intensify. Major economic organizations have revised down their growth forecasts for South Korea this year, citing factors like the prolonged conflict in the Middle East.
The Organization for Economic Cooperation and Development (OECD) anticipates a 1.7% growth for South Korea in 2021, down from its previous forecast of 2.1%. The OECD highlights the country’s vulnerability to energy supply disruptions from the Middle East due to its heavy dependence on imports. Market experts also point out discrepancies in the government’s previous debt-to-GDP ratio forecasts, indicating challenges in maintaining fiscal stability.
