{"id":221880,"date":"2023-01-10T20:19:53","date_gmt":"2023-01-10T14:49:53","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=221880"},"modified":"2023-01-10T20:19:53","modified_gmt":"2023-01-10T14:49:53","slug":"asia-the-saver-the-global-savings-glut-may-persist-as-despite-ageing-rapidly-asia-can-continue-to-be-a-net-saver","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/asia-the-saver-the-global-savings-glut-may-persist-as-despite-ageing-rapidly-asia-can-continue-to-be-a-net-saver\/","title":{"rendered":"Asia the saver \u2013 The global savings glut may persist as, despite ageing rapidly, Asia can continue to be a net saver"},"content":{"rendered":"\n

Source<\/strong>: The post is based on an article\u00a0\u201cAsia the saver \u2013 The global savings glut may persist as, despite ageing rapidly, Asia can continue to be a net saver\u201d published in <\/strong>Business Standard<\/strong>\u00a0on\u00a010th<\/sup> January 2023<\/strong>.<\/p>\n

Syllabus: GS 1 \u2013 Population and Associated Issues<\/strong><\/p>\n

Relevance: <\/strong>impact of demographic changes on Current Account balance<\/strong><\/p>\n

News<\/strong>: The article discusses the impact of aging population and savings on the current account balance of Asian nations.<\/p>\n

How an aging population may affect the saving of Asian nations?<\/strong><\/h5>\n

The demographic shift in 10 major Asian economies (the A-10<\/strong>: China, India, Indonesia, Japan, the Philippines, Vietnam, Thailand, Korea, Malaysia, and Taiwan) is faster than the economic transition.<\/p>\n

Further, there is disparity among the A-10 on the current account balance. For example,<\/strong> India and Indonesia run deficits, whereas north Asian economies run in surpluses.<\/p>\n

However, they have collectively accumulated a surplus of nearly $5 trillion in the last decade. These surpluses are invested in global assets which have also led a boom in the consumption of the world.<\/p>\n

But an aging population may lead to a drop in the savings<\/strong> of A-10 because production would fall due to a smaller number of workers and consumption may keep rising due to the increasing lifespan.<\/p>\n

The number of consumers per worker is known as the dependency ratio<\/strong>. A higher ratio could turn current account balances from surpluses to deficits.<\/strong><\/p>\n

How higher dependency ratio affects the current account balances?<\/strong><\/h5>\n

First<\/strong>, the aggregate demand that affects current account balances includes domestic consumption and investment<\/strong>. Investment (households, corporations and the government) fall as population growth slows and then turns negative.<\/p>\n

This in turn leads to lesser requirement of investments in growth of the economy and invest is more driven by global demand-supply balances and rather than local demand. This affects the current account balance.<\/p>\n

Second,<\/strong> household savings depend on sufficiency of pensions, especially for the retirees who depend on pensions for their future. If pension mechanisms are not adequate, it leads to a drop in consumption. Therefore, there should be a better saving mechanism in order to have a better current account balance.<\/p>\n

How better pension plans can help in the current account surplus?<\/strong><\/h5>\n

The Japanese fund GPIF<\/strong> has nearly 10 percent of all Japanese wealth, with half of it deployed in foreign financial assets.<\/p>\n

The accumulated foreign assets of Japan are so large that the income from them exceeds 4 percent of gross domestic product.<\/strong> This helps Japan\u2019s current account to stay in surplus despite a shrinking workforce<\/strong>.<\/p>\n

However, the pension plans of most of the Asian economy are not good enough to build higher savings which ultimately affects the current account.<\/p>\n

Therefore, there is a need for personal savings or government-mandated savings in Asia to grow.\u00a0This increase in savings with the increase in financial assets will make the A-10 economies as providers of capital to the world.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on an article\u00a0\u201cAsia the saver \u2013 The global savings glut may persist as, despite ageing rapidly, Asia can continue to be a net saver\u201d published in Business Standard\u00a0on\u00a010th January 2023. Syllabus: GS 1 \u2013 Population and Associated Issues Relevance: impact of demographic changes on Current Account balance News: The article… Continue reading Asia the saver \u2013 The global savings glut may persist as, despite ageing rapidly, Asia can continue to be a net saver<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,263],"class_list":["post-221880","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704753732},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/221880","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=221880"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/221880\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=221880"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=221880"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=221880"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}