The ratio of South Korea’s household debt in comparison to its economy has become the highest among major economies, a report showed Monday, sparking concerns over its impact on an already sluggish consumption and the nation’s fiscal soundness.

Asia’s fourth-largest economy was the only country that saw its household debt exceeding its gross domestic product among the 37 countries reviewed by the US-based Institute of International Finance. Debt grew at one of the fastest paces since the onset of the COVID-19 pandemic, it added.

Korea’s household debt-to-GDP ratio stood at 104.2 percent as of the second quarter this year, up 6 percentage points from a year ago.

In comparison, the ratio for Hong Kong was the next highest at 92 percent, with the UK coming third at over 89.4 percent. In the US, the household debt-to-GDP ratio was around 79.2 percent, while Thailand and Malaysia had ratios of 77.5 percent and 73.4 percent, respectively.

The IIF pinned the blame on inflated home prices that pushed the global household debt to grow by $1.5 trillion in the first half of this year.

While the debt level rose in nearly one-third of the countries studied during this period, Korea and Russia showed significant increases, it added.

Seeking to revert the household debt growth rate to pre-pandemic levels, financial authorities have toughened requirements for the repayment capability of borrowers while the central bank raised its policy rate to 0.75 percent for the first time in almost three years in August, making it the first major Asian central bank to do so.

A rapid rise in household debt could weigh on the country’s overall economic recovery from the fallout of the coronavirus pandemic as domestic consumption could be weakened in the event of a rate hike.

The Bank of Korea estimated that households’ annual interest burden will increase by 5.8 trillion won ($4.91 billion) compared to the end of 2020 if the key rate rises by an additional 25 basis points within the year following the 25 basis points increase in August.

The average annual interest burden per borrower is also estimated to have increased by 300,000 won to 3.01 million won from 2.71 million won, as of the end of last year.

BOK Gov. Lee Ju-yeol has maintained a hawkish tone and suggested there could be further tightening, raising expectations for a hike in a monetary policy meeting slated for Nov. 25.

A number of economic conditions, such as increased inflation pressure stemming from bottlenecks in the global supply chain, rising household debt and soaring house prices, have only fueled calls for a further key rate rise this month.

Korea University’s economics professor Shin Kwan-ho said it is “not inappropriate” to raise the benchmark rate due to the given economic situation that the country faces.

“Regulations on loans and another rate hike will slow down the growth rate of household debt. But such measures would increase burdens of borrowers because the size of household debt has already expanded excessively,” he said.

Meanwhile, the amount of corporate debt relative to the size of the Korean economy and its speed of growth also ranked high among the 37 countries. The debt-to-GDP ratio of nonfinancial companies here stood at 115 percent as of the second quarter, placing fifth on the list, following Hong Kong, China, Singapore and Vietnam.

The latest figure was 7.1 percentage points higher than last year’s tally, showing the third-highest growth after Singapore and Saudi Arabia.