S. Korea's savings rate to rank lowest among OECD nations

SEOUL, July 5 (Yonhap) -- South Korea's household savings rate is expected to rank the lowest among members of the Organization for Economic Cooperation and Development (OECD) in 2010, a report by the Paris-based club said Sunday.

South Korea is likely to register a savings rate of 3.2 percent next year, the
lowest among 17 OECD member nations with comparable figures and the same as that
of Japan, according to the report.
South Korea's 2010 savings rate, or savings divided by disposable income, is much
lower than the 8.5 percent average of the 17 countries. Sweden is expected to
record the highest rate of 16.3 percent.
For this year, South Korea's savings rate is forecast to reach 5.1 percent,
compared with the average 8.7 percent of the 17 nations.
Since recording the world's highest rate of 25.2 percent in 1988, South Korea has
seen its household savings rate continue to drop. South Korea logged a savings
rate of 10.7 percent in 2000, outstripped by Belgium.
Local economists said South Korea's savings rate has tumbled as consumption grows
at a much faster pace than income,
"Since 2000, the gain in households' disposable income has been much lower than
the country's economic growth rate," said Kwon Sun-woo, a researcher at Samsung
Economic Research Institute. "That poses a serious threat to the stability of
household finances."
Increased consumption, including higher pension and insurance expenditures, has
eroded households' ability to save money, he said, adding a low savings rate
could have a negative impact on the economy in the long haul.
(END)