Debt by S. Korean self-employed rises in Q1 amid higher delinquency risk

SEOUL, June 21 (Xinhua) -- Debt owed by the self-employed in South Korea kept rising in the first quarter of this year amid the growing concern over higher delinquency risk, the country's central bank said on Wednesday.

Outstanding debt by the self-employed came in at 1,033.7 trillion won (800 billion U.S. dollars) at the end of March, up 7.6 percent from a year earlier, according to the Bank of Korea (BOK)'s financial stability report.

It was 50.9 percent higher than the figure tallied at the end of 2019, right before the COVID-19 pandemic occurred in the country.

The proportion of loans to the vulnerable self-employed stood at 10.1 percent of the total at the end of March, up from 9.0 percent at the end of 2021.

The percentage of the self-employed loans, extended by non-bank financial institutions requiring high lending rates, advanced from 35.5 percent at the end of 2021 to 39.4 percent at the end of March this year.

The BOK said the self-employed income had yet to recover to its pre-pandemic level on the back of higher lending rates and higher commodity prices, noting that the delinquency risk went higher on high interest rates and economic slump.

The delinquency risk ratio of the self-employed, which gauges the proportion of those failing to pay taxes or repay debt for at least five business days, gained to 2.0 percent at the end of 2022 from 1.3 percent six months earlier.

The ratio for the vulnerable self-employed advanced from 9.5 percent to 14.4 percent in the cited period.

The ratios for the overall self-employed and the vulnerable self-employed were estimated to rise to 3.1 percent and 18.5 percent respectively at the end of 2023.