"Future Anxiety" Japanese People Saving Money Amid COVID-19 Concerns

Despite Eased Quarantine Measures, Savings Increase GDP by 10%
US COVID-19 Savings Decrease by Over 60% in One Year

[Asia Economy Reporter Kim Hyunjung] A report has emerged that Japan's "corona savings," accumulated by not consuming during the COVID-19 pandemic, have continued to increase even after the easing of quarantine measures, swelling to a level exceeding 10% of the Gross Domestic Product (GDP).

According to a report by Nihon Keizai Shimbun (Nikkei) on the 5th, Daiwa Securities estimated that as of the end of September last year, Japan's corona savings would exceed 62 trillion yen, more than 10% of GDP. This is more than a 20% increase compared to the previous year's estimate by the Bank of Japan, Japan's central bank. The Bank of Japan had calculated that corona savings would reach about 50 trillion yen (approximately 477 trillion won) by the end of 2021.

Initially, the Bank of Japan expected that "some of the corona savings would be spent to boost personal consumption as COVID-19 is brought under control," but in reality, corona savings increased rather than consumption. In contrast, in the United States, corona savings, which were about 2 trillion dollars (approximately 2,500 trillion won) in mid-2021, shifted to consumption, and by the end of December last year, the savings amount had decreased by more than 60% to only 710 billion dollars. Regarding this phenomenon, a Daiwa Securities official expressed the view that "in Japan, where future livelihood anxiety is deeply rooted, it is difficult to expect a significant reduction in corona savings."

The Japanese people's love for saving is extraordinary. In April 2020, when the Japanese government distributed a special fixed-amount benefit of 100,000 yen (about 1 million won at the exchange rate at the time) per person to support citizens struggling due to COVID-19 and to stimulate consumption, analysis showed that much of it went into savings. In April 2021, a research team composed of experts from Japan and Australia analyzed payment data from March to November 2020 of 230,000 users of the household account app "Money Forward ME" and found that the amount clearly identified as used for consumption purposes was only an average of 6,000 yen (about 60,000 won) per person out of the 100,000 yen. Adding ATM withdrawals, the estimated consumption amount was about 16,000 yen (about 160,000 won), and including transfers to other accounts, the total estimated consumption was about 27,000 yen (about 270,000 won). Based on this, the research team analyzed that more than 70%, or over 70,000 yen, of the 100,000 yen disaster relief fund was saved.

In response, Kyodo News reported, "When the Japanese government decided to provide COVID-19 disaster relief funds to all citizens, there were many opinions that the consumption stimulation effect would be limited," and added, "This study numerically proved that the previous concerns were correct."