South Korea’s household savings doubles on weak economy
Article continues below
]
The household sector’s balance shifted from a deficit in 2011 to a surplus.
It also expects the country to maintain its household saving rate at 8.66 percent next year.
Korea’s rising household savings as the share of net disposable income come not because of increased wages, but mainly due to demographic changes as its population with purchasing power decreases amid an aging society.
“The household sector’s balance shifted from a deficit in 2011 to a surplus in 2012-2014, in part due to transitory demographic factors,†the OECD said in a report.
“Indeed, the household saving rate rose from less than 4 percent to 7.2 percent over that period, consistent with weak private consumption.â€
Also, a growing number of people are saving their income as much as possible rather than spending them mainly for two reasons - weak economic outlook and high household debt.
Korea’s household debt stood at 163 percent of household disposable income in 2014, well above the OECD average of 137 percent. Korea’s household debt in the 60 age group amounted to 73 percent of their financial assets, compared to 20 percent in the U.S., according to the OECD. ■