Taiwan’s national savings rate is estimated to reach the highest in 32 years, as the COVID-19 pandemic has changed people’s domestic consumption habits, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said on Sunday.
Due to the effects of COVID-19 response measures on businesses and people’s income, they are spending less, the DGBAS said, adding that national savings rate is the percentage of GDP that households, companies and the government save rather than spend.
Taiwan’s national savings rate this year is expected to reach 35.79 percent, a rise of 1.44 percentage points from last year and the highest since 1988, the DGBAS said.
In addition, the nation’s excess savings — the difference between its gross domestic savings and gross domestic investments — would climb to about NT$2.4 trillion (US$81.22 billion) this year, it said.
That would translate into an excess savings rate — the ratio of savings to gross national income — of 12.35 percent, exceeding 10 percent for the eighth consecutive year, it said.
With the savings rate expected to be so high, Taiwan is likely to see inadequate growth in investment and consumption this year, the DGBAS said.
While an aging population and a low birthrate have been adversely affecting consumption growth, the COVID-19 outbreak, which started in January, has also affected household consumption and business investments, it said.
Kamhon Kan (簡錦漢), head of Academia Sinica’s Institute of Economics, said the DGBAS data show that Taiwan’s economy is awash in idle funds that are not being invested, which could lead to economic stagnation.
It would be a good strategy to direct those idle funds into substantial investment to help rev up domestic economic growth, Kan said.
Taiwan should restructure its export-oriented economy and try to boost domestic demand to ride out the uncertainty in the volatile global economy, he said.
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