Photo: By erinohara73 on flickr
Countries with higher savings rate tend to have larger potential for consumer spending growth. The less a family needs to save for crucial health bills or retirement, the more likely it is to spend on consumer goods. Right now, China is moving toward a more substantial safety net for just this reason.We found 10 countries across Asia and the Pacific with high gross domestic savings rates, according to the UN Economic and Social Survey of Asia and the Pacific, and highlighted social spending in each country.
Some countries on our list have stepped up social spending to quell civil unrest and others have a long way to go. They may be developing fast, or slow. Either way, they all have the potential to explode with new spending, if their consumers start saving less.
Savings as a per cent of 2010 GDP: 38%
Savings as a per cent of 2001 GDP: 25.4%
Over the last decade Iran, has used its oil revenues to pay for social spending programs. Such spending is actually now damaging the country's budget.
Iran's savings rate might decline if the country's government moved in line with international demands. Markets may then open up for goods to enter Iran.
Savings as a per cent of 2010 GDP: 39.1%
Savings as a per cent of 2001 GDP: 47.4%
Healthcare spending accounted for 4.3% of Malaysia's GDP in 2009 and its health ministry has said that public and private spending on healthcare needs to rise to 7% of GDP by 2020. The government plans to launch a new national health insurance scheme.
An increase in government spending on healthcare may free up consumers to spend more on retail items.
Savings as a per cent of 2010 GDP: 40.7%
Savings as a per cent of 2001 GDP: 12.3%
The IMF recently reported that Turkmenistan should make its social spending apparatus more efficient to speed up economic development. If Turkmenistan was to engage in such a program, its consumers may have more of their own money to spend.
Savings as a per cent of 2010 GDP: 41.2%
Savings as a per cent of 2001 GDP: 28.9%
Bhutan's public health expenditure rose to about 11.5% of GDP in 2007, after several years of weakness. Bhutan is trying to move towards becoming a social welfare society. Such a move, so long as consumers are not taxed to heavily, may free up more capital for retail spending.
Savings as a per cent of 2010 GDP: 45.5%
Savings as a per cent of 2001 GDP: 16%
Kazakhstan's President Nursultan Nazarbayev has ordered an increase in social spending. The portion of the budget earmarked for social spending has been increased eight times since 2001. If the consumer spending rate is to fall, and retail spending rise, consumers must be made more confident that the government's social spending programs will protect them.
Savings as a per cent of 2010 GDP: 46.6%
Savings as a per cent of 2001 GDP: 8.6%
In a 2010 meeting, Azerbaijan's government said social expenditures would constitute 33.3% of the overall budget at about $5.35 billion. Azerbaijian's relatively low investment rate of 17.4% could be boosted by savings and consumer spending could go up if the government maintains its upward trajectory of social spending.
Savings as a per cent of 2010 GDP: 51.1%
Savings as a per cent of 2001 GDP: 38%
China is expected to boost education spending by 9%, healthcare by 8.8% and social security by 9%. The ruling party first began to boost social spending about a decade ago to quell civil unrest.
High inflation has seen retail sales slump to 16.9% in May, falling below a five-year average. China's ageing population needs more social spending and lower inflation rates if it is to see a pick-up domestic consumption.
Savings as a per cent of 2010 GDP: 52.6%
Savings as a per cent of 2001 GDP: 49%
Political pressure is expected to force the Singapore's People's Action Party to boost social spending, after the opposition party gained parliament seats. Public spending on healthcare, education and retired workers is expected to increase.
Rising wages and tourism have seen retail sales increase, but high inflation could curb spending in the near term. Increased social spending would give Singaporeans a larger disposable income.
Savings as a per cent of 2010 GDP: 57.2%
Savings as a per cent of 2001 GDP: 36.9%
Brunei Darussalam provides free medical and health care at government hospitals, health centres and health clinics. A 2000 estimate put the ratio of public to private spending at 97.2% v/s 2.8%.
The theory doesn't apply here but Brunei Darussalam is grappling with rising healthcare costs and resource depletion is a huge concern for the country that is heavily reliant on its oil and gas reserves.
Savings as a per cent of 2010 GDP: 61.1%
Savings as a per cent of 2001 GDP: 42.9%
The Social Welfare Bureau of the Macau SAR government has boosted relief measures for its impoverished population in 2011. Resident card holders who are over 65 will receive annual subsidies and Macau will launch welfare for the disabled as well. Social welfare in the region could however use a significant boost in funds.
Macau's investment rate of 10% is low and the high savings rate indicates huge potential for investment and domestic spending.
Note: Macau is a special administrative region within China.
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