Save no more? Are Japanese turning spendthrift?
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The Japanese spent more than they saved in the 12 months ended March 2014, the first time that’s happened since the data set began in 1955, with the savings rate at a negative 1.3 percent in the last fiscal year.
“It’s something to keep an eye out for in the medium-term because Japan’s debt has been funded domestically, and very cheaply. But foreign investors would require a more appropriate risk premium,” said Toru Yamamoto, Daiwa’ Securities chief rates strategist.
Japan has quite a bit of debt, with the country’s debt-to-gross domestic product (GDP) at over 220 percent, one of the highest in the world, financed by the domestic savers and Japanese government bond (JGB) investors at some of the lowest interest rates globally.
Questions & Answers
Q.What was the Japanese savings rate in the last fiscal year?
What was the Japanese savings rate in the last fiscal year?
The Japanese savings rate was a negative 1.3 percent in the last fiscal year. This marked the first time since 1955 that the Japanese spent more than they saved over a 12-month period.
Q.Why is the change in Japanese spending habits important for the country's debt?
Why is the change in Japanese spending habits important for the country's debt?
Japan's debt has traditionally been funded domestically and cheaply. A shift to foreign investors, due to reduced domestic savings, would likely require a more appropriate risk premium, making the debt more expensive.
Q.How does Japan's debt-to-GDP ratio compare internationally?
How does Japan's debt-to-GDP ratio compare internationally?
Japan has one of the highest debt-to-GDP ratios globally, standing at over 220 percent. This high level of debt has historically been financed by domestic savers and JGB investors at very low interest rates.