The big problem of the Korean economy is that the people are getting richer and the problems are getting bigger.

The announcement by the Bank of Korea in January that national income per capita may have surpassed that of Italy last year made big news in South Korea. The fact that South Korea surpassed the Group of Seven (G7) economies in terms of income proves that the country has indeed joined the ranks of the wealthy, but the country is now facing some serious economic problems that only wealthy countries have.

The Wall Street Journal reports that one of South Korea’s current economic challenges is the surge in housing prices and household debt, as evidenced by the country’s recent political scandals. Employees of Korea Land and Housing Corporation, a state-run developer, are suspected of using inside information to invest in land in state-owned housing developments for profit.

The International Monetary Fund (IMF) forecasts that gross domestic product (GDP) growth will average 1.6 percent in the United States and 2.1 percent in South Korea from 2018 to 2025, the smallest gap between the two countries in history at 0.5 percentage points.

Although Korea is already a rich country by world standards, its GDP per capita in 2019 will be $28,675, still only half that of the United States, according to World Bank data based on the 2010 exchange rate.

South Korea’s demographic crisis (the country had the lowest total fertility rate in the world last year at 0.84) is also a serious drag on the country’s economy. South Korea’s population growth rate has been lower than that of the United States for almost the entire last 30 years.

Korea also faces the risk of a “balance sheet trap,” in which all sectors of the economy try to reduce consumption at the same Time. The debt burden of Korean households is 12.8%, much higher than the 7.6% of the US and 6.1% of Germany. Korea’s non-financial corporate debt, equivalent to 110% of GDP, is close to reaching its highest level since the Asian financial crisis in 1999.

Expanding government spending may help. Although South Korea’s unemployment rate surged to a 21-year high of 5.4% in January, the government has been restraining public spending during the Epidemic. South Korea’s fiscal deficit was 4.2 percent of GDP last year, the fourth lowest among Organization for Economic Cooperation and Development (OECD) member countries.