Thursday, February 19, 2015
Demographics and the effect on the savings rate.
Recently published national income accounts show that Japan's households in 2013 spent more than their disposable income -- that is, their savings rate was negative. Economists have predicted the decline of Japan's savings rate for many years. The surprise has been its speed.
- Current account surpluses will be pushed towards zero for the foreseeable future, and the trade balance tend towards deficit.
- Despite lower national savings, there is no sign that foreign buyers treat Japanese government securities as anything but safe havens.
- Demand for healthcare, pharmaceuticals, retirement communities and related services will grow as retirees draw down their savings.
- These sectors therefore number among the 'growth industries' that the Abe government will attempt to encourage.