Income increased, but wallets stayed shut... Households’ spare funds reach ₩93 trillion, an all-time high

Q1 net fund operations surge by ₩30 trillion

Consumption shrinks despite year-beginning bonuses

Fewer new apartment move-ins also influenced results

It was found that in the past first quarter, Korean households' surplus funds increased to their largest amount ever recorded. As domestic and global uncertainties surged—such as political turmoil and trade wars—people cut consumption and increased savings and investments.

According to the “Q1 Flow of Funds (Provisional)” statistics released by the Bank of Korea on the 8th, net fund operations by households and nonprofit organizations totaled ₩92.9 trillion in the first quarter. This is over ₩30 trillion higher than the previous quarter’s ₩62.6 trillion, marking a new record high. Net fund operation is calculated as the amount of fund operations by each economic entity minus the amount of fund procurement for the period. Households are generally net fund operators—operating more funds than they procure—while companies are often net fund procurers, securing more funds than they operate. Kang Jin-gyu, a Bank of Korea fund circulation team leader, explained, “Despite increased household income due to year-beginning bonuses, surplus funds grew as new apartment move-ins decreased and consumption slowed.”

The total scale of household fund operations in Q1 was ₩101.2 trillion. Deposits with financial institutions rose by ₩49.7 trillion, and domestic and foreign equity securities and investment fund operations increased by ₩29.3 trillion. Households procured a total of ₩8.2 trillion in funds this quarter, down from ₩8.6 trillion last quarter. The household debt-to-GDP ratio at the end of Q1 was tallied at 89.4%.

The Bank of Korea predicted that the current increase in spare household funds is unlikely to continue into Q2. This is because real estate transactions are expected to become more active in Q2, leading to greater household fund procurement. Kang added, “In Q2, housing transactions are expected to rise in Seoul and the metropolitan area, which will further increase the rise in household debt.”

Non-financial corporations procured a net amount of ₩18.7 trillion in funds in Q1, an increase of ₩2.5 trillion from the previous quarter’s ₩16.2 trillion. Although investment slowed due to worsening economic conditions and rising uncertainties, there was an increase in demand for working capital.

Reporter Kang Jin-gyu josep@hankyung.com