Individual Savings Deposit Rate Falling

Last year the increase of savings deposits by households and self-employed people hit its lowest level in eight years since 1995, due to the prolonged economic slump.

According to the flow of funds statistics at the Bank of Korea (BOK) on May 31, the net inflow amount of savings deposits from the individual sector was put at 12.9546 trillion won last year.

This figure was down 65.6 percent from the previous year’s 37.6428 trillion won, and it was the lowest level in eight years since 1995 when it posted a mark of 9.6442 trillion won.

The individual sector in the flow of funds statistics refers to households and individual businesses except corporations. The net increase of savings deposits by the individual sector means the increase in savings deposits exclusive of the savings deposits withdrawn from banks within a given period time.

After reaching 14.3004 trillion won in 1996, the net increase in savings deposits by the individual sector had steadily increased to 23.1611 trillion won in 1998 and 61.8896 trillion won in 2000.

However, the amount declined sharply to 34.1845 trillion won in 2001, increased a little in 2002 and slumped to about 10 trillion won last year.

An official of the financial statistics department in the BOK, Kim Young-yeun, said, “Households and independent businessmen did not have many surplus funds owing to the economic downturn. Individuals had put more surplus money in the bank to buy apartments and land amid the booming real estate market in 2002, but this sector also declined heavily because the government strengthened the regulation of real estate last year.

Joong-Hyun Park sanjuck@donga.com