South Korea

Intelligence for Better Decision Making

Rising Household Debt Alters Borrowing Patterns and Slows Private Consumption in South Korea
Dec. 1, 2025 | Households

South Korea’s rapid household debt growth is reshaping lending patterns, elevating borrowing costs and dampening private consumption.

**Year-end volume limits at the country’s five major commercial banks have effectively capped mortgage lending.**
In November, outstanding household loans rose by 1.53 trillion won—slower than October and barely above September’s gain. Mortgage balances, at roughly 611 trillion won, recorded their smallest monthly increase in one year and eight months, prompting some banks to suspend new mortgage application counters.

**By contrast, unsecured household lending surged by 1.14 trillion won in November, marking the largest monthly increase in over four years.**
Personal overdraft balances alone expanded by 917.1 billion won—more than four times the growth of other unsecured loans—as borrowers tap credit lines to offset restricted mortgage access and to fund equity and other asset investments.

**Household lending rates have climbed alongside rising bank bond yields.**
Major banks now offer mixed-rate mortgages with upper bounds above 6%, a level unseen in nearly two years, while lower bounds have returned to the mid-4% range after about a year. Credit loan rates for prime borrowers have also risen in line with one-year bond yields, pushing up overall borrowing costs.

**A Bank of Korea report released on November 30, 2024, shows the household debt-to-GDP ratio jumped 13.8 percentage points from 2014 to 2024, the third-largest increase among 77 IMF-surveyed countries after China and Hong Kong.**
BIS data indicate the debt service ratio climbed 1.6 percentage points from Q1 2014 to Q1 2025—the second-highest global rise after Norway—reflecting substantially higher principal and interest burdens on households.

**Despite this debt surge, private consumption’s share of GDP fell by 1.3 percentage points over the past decade, a divergence from peer countries with similar debt trajectories.**
The BOK estimates that excessive household credit growth since 2013 has reduced annual private consumption growth by about 0.40 to 0.44 percentage points. If household debt had remained at 2012 levels, private consumption in 2024 would be 4.9–5.4% higher, boosting its GDP share from 48.5% to roughly 50.9%.

**South Korean consumers exhibit a notably weak wealth effect from real estate: a 1% rise in property prices spurs only a 0.02% increase in consumption, compared with 0.03–0.23% in other advanced economies.**
Contributing factors include the absence of housing liquidity products such as reverse mortgages, cultural norms treating home equity as reserved for future housing needs, and rising vacancy rates in non-residential real estate.

**The BOK describes household debt’s impact on consumption as a gradual, chronic contraction—akin to arteriosclerosis—rather than a sudden crisis, although it notes some recent declines in the debt-to-GDP ratio.**
Demographic shifts have also weighed on consumption growth, subtracting 0.8 percentage points over the decade, while debt accumulation shaved off about 0.4 percentage points annually. The report warns that heavy debt service obligations will likely continue to constrain private consumption over the long term.
South Korean Corporate Dollar Holdings Reach Record High Amid Won Depreciation
Dec. 1, 2025 | Financial System

Corporate deposits in US dollars at South Korea’s leading banks have climbed to unprecedented levels as the won weakens and exchange-rate uncertainty rises.

**Five major South Korean banks—Kookmin, Shinhan, Hana, Woori, and NongHyup—saw corporate dollar balances jump by roughly 21 percent in November, rising from $44.325 billion at the end of October to $53.744 billion by November 27, 2025.**
This increase marks the fastest monthly growth in corporate dollar holdings so far this year.

**Banks registered this surge against a backdrop of a sharply weakening won and forecasts that the won-dollar rate could top 1,500 won.**
In past episodes of dollar strength, investors often sold dollars to lock in exchange gains. This time, however, corporations have continued to build their dollar reserves, driven by expanding US investments and mounting exchange-rate uncertainty that leads firms to hold onto dollars in case the greenback’s strength endures.

**Retail investors have mirrored this trend, boosting their dollar deposit holdings for the fourth straight month.**
As of November 27, individual deposits reached $12.253 billion, with one bank reporting more than $3 billion in retail dollar balances—the highest since January 2022. Growing interest in overseas equities and expectations of further dollar gains have sustained this demand for foreign currency deposits among individuals.

Including public institutions, total dollar deposits at the five banks reached $67.01 billion by the end of November, an 18 percent increase from October and the largest monthly rise across all customer segments this year.

**The won’s value fell from about 1,390 won per dollar in early September to over 1,470 won by late November, despite government efforts to support the currency.**
Market observers point to ongoing volatility and no clear signs that the foreign exchange market will stabilize soon.

**To address the won’s rapid decline, the South Korean government and the National Pension Service met on November 24 to discuss measures for exchange-rate stabilization.**
While they did not announce any specific actions, the meeting reflects authorities’ deep concern over persistent currency fluctuations.

Monitored Intelligence for South Korea - Dec. 1, 2025


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Erudite Risk takes an all risks approach to intelligence reporting. We categorize key intelligence into one of 40 different risk intelligence categories.

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누리호 4차 발사 성공, 韓 민간 우주개발 시대 활짝 [K-뉴스페이스·上]

Nuriho 4th Launch Success, Korea's Private Space Development Era Opens Wide [K-NewSpace·Part 1]

Newsis | Local Language | News | Dec. 1, 2025 | UndeterminedTech Development/Adoption

The Korean launch vehicle Nuriho successfully completed its fourth flight on November 27, 2025, marking the first time a vehicle manufactured and assembled entirely by the private sector, specifically Hanwha Aerospace, carried out a nominal mission. This launch, conducted at night to meet specific orbital conditions, represents a significant milestone in Korea's transition from government-led to private-sector-led space development. Hanwha’s role expanded not only to vehicle manufacturing but also to participate in launch preparations alongside the Korea Aerospace Research Institute (KARI), which still led launch operations.

The government plans the fifth and sixth Nuriho launches in 2026 and 2027, respectively, as critical tests to verify the stability of private-sector-led launch operations. From the fifth launch onward, Hanwha’s involvement will increase, including expanded personnel presence in key launch control centers, with the expectation that by the sixth launch, Hanwha will handle most operations except for mission director and launch operations director roles. This gradual handover is designed to confirm the feasibility of a privately centered launch system through repeated successful launches.

Concerns remain about a potential gap in launch activity following the sixth launch in 2027, which could disrupt the emerging private-sector ecosystem. The government is working to secure funding for a seventh launch planned for 2028 under the ‘Nuriho Heritage’ project, intended to cover the gap until a next-generation launch vehicle is tested in 2031. However, this project faces delays due to ongoing preliminary feasibility study requirements, raising fears of another launch hiatus. Such interruptions risk weakening industry expertise, supply chains, and operational continuity, as experienced during the 2.5-year gap between the third and fourth launches.

To prevent this, the government intends to incorporate the seventh launch budget into the next fiscal year and aims to maintain annual launches from the eighth launch onward. Experts emphasize that sustaining the private transition requires continuous launch activity to maintain personnel proficiency, industry networks, and operational data. The future role and funding structure for Nuriho beyond the initial program phase remain key to securing Korea’s private space development momentum.

"6.5초마다 에어컨 한 대씩"…中 샤오미, 전기차 이어 가전까지 '제조 독립'

One Air Conditioner Every 6.5 Seconds... China's Xiaomi Achieves 'Manufacturing Independence' from Electric Cars to Home Appliances

Digital Daily | Local Language | News | Dec. 1, 2025 | UndeterminedTech Development/Adoption

Xiaomi has announced the opening of a new R&D building at its smart appliances factory in Wuhan, marking a significant step toward manufacturing independence. The facility consolidates technology development, manufacturing, and verification with around 300 engineers working in one space. This development completes Xiaomi's "Human x Car x Home" ecosystem, integrating its smartphone, electric vehicle, and home appliance businesses.

The Wuhan smart factory, operational since October and equipped with the self-developed Fengpai Smart Manufacturing Platform and AI vision inspection system, can produce one premium air conditioner every 6.5 seconds. Core components are subjected to 100% precision inspection, highlighting the factory's high throughput and automation level. Xiaomi plans to shift major white goods production, including air conditioners, refrigerators, and washing machines, to a fully in-house design and manufacturing system, moving away from outsourced production and badge engineering.

By achieving manufacturing capabilities across smartphones, electric vehicles, and home appliances, Xiaomi has created a hardware triangle and is advancing smart home and IoT strategies to provide integrated connectivity across its products. This expansion and ecosystem strengthening are anticipated to challenge established Korean firms like Samsung Electronics and LG Electronics, potentially reshaping the competitive dynamics of the global smart home market.

'한국' 타켓 삼은 북한 해킹조직 라자루스·김수키

North Korean hacking groups Lazarus and Kimsuky targeting South Korea

Hankyung | Local Language | News | Dec. 1, 2025 | North Korea

North Korean hacking groups Lazarus and Kimsuky have been intensively targeting South Korea, with Lazarus notably linked to a large-scale cryptocurrency exchange hack involving 44.5 billion won. According to a report by security firm AhnLab covering October last year to September this year, Lazarus was mentioned 31 times and Kimsuky 27 times among APT (Advanced Persistent Threat) group activities, with North Korean groups having the highest number of attacks at 86 cases.

Both groups focus on political, diplomatic, financial, and cryptocurrency sectors for financial gain and intelligence gathering. They employ sophisticated tactics such as spear phishing, supply chain attacks, multi-platform malware, privilege escalation, and MFA (multi-factor authentication) bypasses. Lazarus recently expanded its targets to cryptocurrency, finance, IT, and defense, developing malware compatible with macOS and Linux that can monitor clipboard activity and steal cryptocurrency wallet information.

Lazarus also executed a notable "Operation Sinkhole" attack, exploiting software vulnerabilities through watering hole techniques to infect organizations in IT, software, and finance sectors in South Korea. Their tactics in the recent Upbit hack echoed their established methods seen in past foreign crypto exchange attacks, including signature manipulation, address-modifying malware, stealthy asset transfers, and wallet address tampering.

Kimsuky employs disguise and social engineering spear phishing, often distributing malware disguised as event invitations or interview requests. They hide origins using Russian email domains and Korean free domains while frequently utilizing ISO files and Hangul documents in attacks. The group deploys multi-stage attacks over social platforms like Facebook and Telegram and has recently used AI-generated fake IDs. Subgroups such as Larva-24005 and Larva-24009 specifically target South Korean users with keylogging and link-based attacks.

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