Record High Household Savings Amid Economic Uncertainty

In an unprecedented turn of events, household surplus money in South Korea has skyrocketed to a record high of 92.9 trillion won in the first quarter of 2025, marking a significant increase of 30.3 trillion won from the previous quarter. This surge is attributed to weakened consumption and economic downturn, as reported by the Bank of Korea.

Understanding Net Financial Investment

Net financial investment, a key indicator of how households manage their surplus funds, has reached its highest level since records began in 2009. Households are increasingly channeling their surplus into deposits, bonds, and stocks, while also supporting sectors in need of funds.

Factors Driving the Surge

Increased income from year-end bonuses and reduced consumption due to economic uncertainty have contributed to the growth in household savings. Notably, deposits in financial institutions rose by 49.7 trillion won, with investments in equity securities and funds growing by 29.3 trillion won.

Household Debt Ratio Shows Decline

The household debt ratio to nominal GDP has decreased to 89.4%, continuing a downward trend for the sixth consecutive quarter. This marks the first time the ratio has dipped into the 80% range since late 2019.

Future Projections

With housing transactions expected to rise in Seoul and metropolitan areas, household debt growth may expand, potentially increasing the debt ratio to GDP. Meanwhile, non-financial corporations and the government have also seen an uptick in net borrowing, reflecting broader economic challenges.