South Korean Households' Excess Funds Shrink in Q2

Excess funds held by South Korean households fell sharply in the second quarter due to increased spending and debt repayment, while local companies saw their shortage of funds dwindle, South Korean central bank data showed Wednesday.

Excess funds held by local households, including nonprofit organizations, came to 13.7 trillion won (US$12.4 billion) as of end-June, compared with 24.3 trillion won from three months earlier, according to preliminary data from the Bank of Korea (BOK). The on-quarter decrease came as people increased their spending and payments on housing, state news agency (Yonhap) reported.    

The BOK kept its policy rate unchanged at 1.25% earlier this month after sending it to the record low in June in a bid to help revitalize the economy. In the April-June period, the amount of fresh funds raised, mostly borrowed, by households and nonprofit organizations, came to 36.6 trillion won, compared with 20.2 trillion won from three months earlier, according to the BOK. 

The amount raised by nonfinancial local companies increased to 23.5 trillion won, up from 21.4 trillion won over the cited period. Still, their shortage of funds dwindled to 3.2 trillion won from 3.5 trillion won.

The value of excess funds held by the central and local governments came to 8.8 trillion won as of end-June, up from 5.3 trillion won in the previous quarter. As of end-June, the country's overall financial assets were valued at 15,133 trillion won, up 1.3 % from three months earlier. 

Financial assets held by households and nonprofit organizations came to 3,284 trillion, up 53.4 trillion won from three months earlier, while their total liabilities stood at 1,479 trillion won, up 36.7 trillion won over the cited period. 

Source : QNA