Australians better savers than Americans
High saving rates may not be as crucial to sustaining high economic growth as previously thought, according to a study by a University of Queensland academic.
Economics Department Associate Professor Tony Makin recently completed a two-year study of saving rates in the Asia-Pacific region as part of his role as Australia's representative to the Pacific Economic Co-operation Council (PECC), an APEC-related body.
The report Domestic Savings in the Pacific Region: Trends and Prospects found that even though over the past 30 years Australians had been better savers than Americans, the United States economy had performed more strongly than its Australian counterpart.
In addition, the highest saving rates in the region had been achieved by major Asian nations but these were now experiencing economic crisis, Dr Makin said.
"The strength and resilience of the United States economy in contrast to the stagnation of many Asian economies seems to suggest that higher saving may not be as crucial to sustaining high economic growth as we have previously been lead to believe," he said.
"How saving is used in the economy and overall productivity is at least as important as how much saving is actually generated."
The report provides a comprehensive examination of trends and influences on saving behaviour in the region's major economies.
"The role and significance of Australia's saving behaviour has been quite central to the domestic economic policy debate for some years now," Dr Makin said.
PECC was first established in 1980 at the initiative of the Australian and Japanese prime ministers of the time bringing together senior government, academic and business representatives from 23 Asia-Pacific economies in a range of forums to examine select economic issues.
In the study, recently published in a special issue of PECC's Pacific Economic Outlook , Dr Makin found the Asia-Pacific region was the largest supplier of saving in the world.
"Since 1980, saving in the Asia-Pacific area has remained stable as a proportion of the combined Gross Domestic Product (GDP) of the region, even though the saving rate for the world as a whole has fallen over this period," he said.
"Despite the ongoing Asian crisis, the saving rate for the Asia-Pacific region is forecast to rise again slightly from current levels by 2005."
Dr Makin said the report showed that whenever practised throughout the region over recent decades, fiscal consolidation and lower budget deficits had generally raised domestic saving.
For more information, contact Dr Makin (telephone 07 3365 6560).
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