12 trillion ↑ in interest burden with this big step... "Reducing Growth Rate"

<Anchor>

As the base interest rate rises to the 3% level again for the first time in 10 years, both the borrowers and companies from the bank have an increased interest burden.

The Bank of Korea said that economic vitality is declining due to reduced spending, and people who bought a house with debt will suffer greatly, but for now, the priority is to control inflation.

Next is reporter Im Tae-woo.

<Reporter> The

increased interest burden due to the base rate hike is over 12 trillion won for both individuals and businesses.

As interest rates on major commercial banks' loans, which have already entered the 7% range, exceed 8% one after another, the self-employed and the low-income class, including the so-called 'young people', are likely to suffer from increased interest rates.

[Self-Employed: I'm glad I don't have to pay debt.

While living on the national pension, I can't make any money from that business.

As the percentage (interest rate) keeps increasing, the (interest rate) keeps going up even by a few pennies...

.]

Still, in the real estate market, where transactions have been cut off, the decline in house prices is likely to increase.

[Won-Gap Park / Senior Member of KB Kookmin Bank: Until there is a signal that the interest rate hike rally is over, it is expected that the transaction cliff and price decline will occur at the same time.]

Companies are also a problem.

The Bank of Korea analyzed that if the base interest rate rises to 3%, 6 out of 10 domestic companies will not be able to repay the interest with the money they earned.

In addition, if interest rates continue to rise as predicted, the interest to be borne by both companies and individuals next year will double compared to the beginning of last year, exacerbating the crisis.

The Bank of Korea predicted that the rate hike would reduce economic growth by 0.1 percentage point and fall below the previous forecast next year.

Nevertheless, it has made it clear that for the time being there will be no choice but to raise interest rates.

[Lee Chang-yong/President of the Bank of Korea: Regardless of how much you sacrifice for the economy, if the inflation rate continues to rise by more than 5%, you will have no choice but to make an economic policy centered on inflation.]

(Video Edit: Ho-jin Kim)

---

<Anchor>

Let's organize this with reporter Im Tae-woo of the Ministry of Economy.

[Reporter Im Tae-woo: In a word, the worst has not yet come, and I made an announcement like this.

The three pillars of the US, China, Europe and the global economy will not all survive next year.

That's why they say that the world's growth rate will drop from 3.2% this year to 2.7% next year, and it could even drop below 2%.

Korea's economic situation and interest rate movements are inevitably affected by these variables.]

[Reporter Lim Tae-woo: Even during the 2008 financial crisis, the Chinese economy endured for a while, so we also benefited, but this time it is a little different.

In this situation, even the interest rate rises, and most of the companies that finance their business with loans are in a situation where they are at a loss.

When the FKI asked 100 large companies in the manufacturing industry, 85% answered that the base rate of 3% was the limit.

In the end, they will tighten their belts to cut costs, and in serious cases, there may even be talk of restructuring, saying that they will also reduce labor costs.]

[Reporter Im Tae-woo: Above all, the United States continues to raise the key interest rate to catch its urgent inflation.

The whole world has no choice but to follow suit.

It is only a matter of time as the US has a momentum to raise it by 1% or more by the end of the year

[Reporter Im Tae-woo: I thought that the low interest rates in the 1-2% range would last for 10 years, but now I need to think differently.

Above all, we need to reduce debt itself and make full use of various financial support such as low-interest and fixed-rate conversion products that the government is actively promoting.

In this situation, it is necessary to refrain from investing in risky products by borrowing debt to aim for a high return.]

▶ Another 'big step' with the base rate of 3%...

this is not the end