SEOUL, Jan. 12 (Xinhua) -- South Korean finance minister on Thursday warned of economic difficulties this year due to the so-called three-high phenomenon, including high inflation, high interest rates and high debts.
"This year will likely be very challenging for the entire world as well as for (South) Korea as the effect of monetary tightening in major economies spreads in full swing amid the prolongation of high inflation, high interest rates and high debts," Minister of Economy and Finance Choo Kyung-ho told a press conference with foreign media in Seoul.
Choo, who doubles as the deputy prime minister for economic affairs, said the government will focus policy efforts on overcoming the crisis.
The country's central bank has tightened its monetary policy stance since August 2021, lifting its benchmark interest rate from a record low of 0.50 percent to 3.25 percent.
Fast rate hikes added debt-servicing burden on households already struggling with high inflation and massive debts.
Debts, owed by households to deposit-taking banks, dwindled 2.6 trillion won (2.1 billion U.S. dollars) in 2022 amid higher lending rates, but the debts spiked 100.6 trillion won (80.9 billion dollars) in 2020 and 71.8 trillion won (57.7 billion dollars) in 2021 each to remain near the record-high level.
The government eased regulations on mortgage loans to prop up the faltering housing market by allowing potential buyers to purchase new home with borrowed money.
Choo said the lending regulations had been so excessive to restrict normal housing transactions for the past years, calling the deregulation a "normalization."
The minister added that the government will keep in place the regulations to prevent excessive mortgage and credit loans.
