[Young journalist Siwon Lee] The gap between the capital area and non-metropolitan regions enlarging the insolvent economy from industrial imbalance is concerned. While the metropolitan area is economically benefiting from AI and semiconductor industry, the local economy is suffering from contraction in construction and petrochemicals.

According to the Bank of Korea’s ‘2026 the First Half Year’s Regional Economic Preference’, the capital region exemplified a significant improving economic trend. However, the Southeastern region, Honam region, and Gangwon region remained steady, while Chungcheong Region, Daegyeong Region, and Jeju Region also could not close the gap with Seoul. 
 
The main reason for the gap was the semiconductor and export industry. The metropolitan area benefited from expansion of memory demand for AI and DRAM and NAND flash price increase. However, the main regional industries were deteriorated by raw material’s price increase and stagnation of the construction industry. 
 
The problem is that economic polarization in the real economy is also putting regional banks in danger. Although the commercial banks, which give loans for major companies, are remaining sound, regional SMEs and small business owners are struggling with rising delinquency rates.

According to the financial sector, 5 regional banks had a delinquency rate of 1.33%. This is 1.19% higher than last year’s result. The local bank’s delinquency rate was near 0%, but just after a year and a half, it increased to 1.3%. This is higher than 2009, when the global financial crisis almost happened, the first quarter’s report. At the same time, the annual delinquency rate of 5 commercial banks was 0.39%. 
 
As delinquency rates rose, the burden of loan-loss provisions increased significantly. This resulted in net profit of 5 regional banks becoming 606.4 billion KRW, which is 76.9 billion KRW less than last year. 

The current situation of non-performing loans reflects the stagnated regional economies. According to the Bank of Korea: Economic Statistics System, at the end of May, Daegu’s corporate loan delinquency rate was 1.29%, which was the highest. Gwangju(1.09%) and Jeju(1.09%) also resulted in around 1% of corporate loan delinquency rate. 

Household loan delinquency rate also increased around regional areas. For example, Jeju recorded the highest rate at 1.24%, followed by Jeonbuk (0.84%) and Gwangju (0.62%).Due to the economic slowdown, revenue decreased with high interest rates, which caused household stores and SMEs to be hit hard. 

According to the ‘2026 SME Financial Condition Survey’, SMEs that expected next year’s business management to stagnate were 25.7%. This is 10.9% more than this year’s forecast. 
 
A financial sector official stated, “The stagnation in regional economies is creating a financial distress, resulting in higher delinquency rate, and weakening rural economies.” The officer also added, “The financial support policy for regional vulnerable borrowers and SMEs is needed so that the semiconductor boom will not affect.”

▶원문 기사: 기업도 은행도 지방에서 ‘한숨’…수도권과 차이 어디서 났나 (이코노미스트, 2026. 7. 31)
 

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