Savings rate in middle-income class fall sharply

With consumption patterns of people in the middle class moving closer to those of the rich, the nation¡¯s savings rate has seen sharp declines over the past few years. It was also found that those in the low-income class make no savings at all on average and rely on debts to survive.

As a result, analysis shows that the nation¡¯s total savings rate has continued to drop since 1998. In a report on changes of savings rates since the foreign exchange crisis, the Bank of Korea said Monday that Korea¡¯s total savings rate posted 33.4 percent in 1997, 34 percent in 1998 and 33.7 percent in 1999, but the figure fell 32.1 percent in the first half of this year.

By income level, the savings rate in the middle-income class fell from 27.3 percent in 1997 to 16.1 percent in the first six months of this year, marking the steepest decline among all classes. Those in the low-income class managed to save 9.1 percent of their incomes in 1997 but in the first half of this year, their savings rate recorded minus 3 percent. This means, rather saving, they are falling into debt.

The nation¡¯s middle-income class, or those ranking fourth to seventh on a 10-grade income scale, has yet to restore their incomes to the pre-crisis level but their spending began to increase sharply from the second half of last year, lowering their savings rate dramatically.