Household Savings in China, India and South Korea
The household saving rate in Asian countries like India and China continue to be much higher than the U.S. personal saving rate. In the U.S., the personal saving rate as a percentage of disposable income was just 4.4% in October this year. This rate is actually higher than where it stood in 2008. In the first quarter of last year it was just over 1%. From 2008, the rate has been increasing and reached 5% in the second quarter this year as consumers saved more of their disposable income and reduced consumption.
Source: BEA
The latest edition of Finance and Development magazine from the IMF, has an interesting article titled “Rebalancing Growth in Asia”.
National and Household Savings
The following is a summary of main points about household savings in China, India and South Korea:
- In India, since the 2000s household savings have remained the major source of national savings, amounting to about 20 percent of GDP
- In South Korea, household savings has fallen as a percentage of GDP since the 1990s
- China’s household saving rate reached 28% in 2008 after rising consistently from 1991
- The household saving rate as a percentage of disposable income in India has increased to an incredible 32% in 2008 from about 20% in 1998
- South Korea’s saving rate has fallen from about 30% in the 90s to just 7% in 2007
It is interesting to note than during periods of tremendous economics growth in India and China, the household saving rate has increased nicely.This is in sharp contrast to the US where the personal saving rate actually decreased to almost negative levels during the high growth period of the 1990s.
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