1998"s Savings Rate the Lowest in 13 Years

Korea's savings rate in 1998 recorded the lowest figure since 1985.
The Bank of Korea announced on May 10 that the total rate of savings combining both government and private sectors was only 33.2 percent.
The savings rate has been declining for the past three years, recording 33.8 and 33.4 percent in 1996 and 1997, respectively, although during the past decade it had steadily increased to a peak 39.3 percent in 1988 from about 18 percent in the early 1970's.
Both the income and consumption of Koreans fell 0.9 and 1.8 percent last year from the previous year, showing a decline not seen in the country in a long time.
In classifying the income levels of urban workers according to five classes, the income of the highest income class declined only 1.2 percent, while its consumption dwindled 10.2 percent. As a result, its actual savings rate increased 13.0 percent rather than that of the previous year. Therefore, the highest income earners actually received substantial profits from last year's high interest rates while middle and lower classes suffered a decrease in savings because of reduced incomes last year.
The rate of governmental savings dropped to 8.1 percent from 10.6 percent of the previous year because of expanded government expenditures in social welfare and declining tax revenues.
Jangsoo Seo:jsbee@joongang.co.kr