KDI, Hope of Economic Recovery Due to Increased Household Credit

The economic experts analyzed that the domestic economy will recover because the `household credit`, including the bank loans for household and the credit card usage, has shown the highly increasing tendency.

The Korean Development Institute (KDI) told yesterday in `the Analysis of the Economic Tendency` that the household credit increased 54 trillion won, up 24.3 percent, in the first quarter of this year (January-March) from the year before.

The KDI analyzed that ``the ratio of the household loans to the private loans has continuously expanded from 39.9 percent in December 1999 to 48.1 percent in December 2000, and to 49.1 percent in March this year. This rising tendency will continue in the second quarter (April-June) this year``.

And the KDI interpreted that ``such increasing tendency of the household credit signals the recovery of the domestic economy, reflecting the shift of the fund distribution by the financial institutions from the conglomerates to the household and the small & medium companies``.

According to the Bank of Korea`s examination, as of the end of March this year, the balance of the total household credit was plus 276 trillion 200 billion won, and the balance of the household credit per household was 19.3 million won, up 23.7 percent from the same period of last year (15.6 million won).

The bank loans for general fund which occupy 70 percent of the household credit, rose 25.1 percent year-to-year, and the sales credit, including the credit card use, increased 17.1 percent.

Park Joong-Hyun sanjuck@donga.com