BOK downplays concern over falling savings rate

SEOUL, Aug. 5 (Yonhap) -- South Korea's central bank on Wednesday downplayed
worries that the nation's falling individual savings rate may erode its
investment capacity, saying households will likely save more amid economic
uncertainty.

South Korea's total savings rate stood at an annual average of 30.8 percent
between 2006 and 2008, down from 37.7 percent seen in the 1986-1990 period,
according to the Bank of Korea (BOK). Total savings rate refers to the ratio of
total savings to national disposable income.
Individuals' savings rate in particular declined sharply to 4.8 percent in the
cited period, down from 16.9 percent in the comparable period.
The data comes as concerns are mounting that South Korea's falling savings rate
could erode the country's capacity to expand investment, denting potential
economic growth.
The BOK attempted to allay such worries, noting that South Korea's total savings
rate remains firm compared with other nations and that the pace of decline has
slowed, suggesting there would be little difficulty in securing investment
resources from the private sector.
"Compared with other major countries, Korea's total savings rate remains at a
high level and due to economic uncertainty, there is a high chance that
individuals will increase savings to brace for future rainy days," said Kim
Min-woo, an official at the BOK.
The United States has seen its household savings rise amid a murky economic
outlook in the aftermath of the global recession.
sooyeon@yna.co.kr
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