As Japan continues to maintain a current account surplus, it will remain subject to overseas criticism that its people should spend more and save less. However, the truth is that Japan's savings ratio has rapidly declined over the past decade. Let us look at some data and discuss why this is happening, and what should be done.
First of all, Japan's savings ratio, which stood at 15.1 percent in 1991, has dropped to 6.4 percent, according to the latest data available, and the pace of decline has accelerated in recent years.
Unlike Japan, the United States has long been criticized for its savings shortage. Americans are blamed for spending too much and thus incurring current account deficits -- one major reason behind the dollar's instability -- and have been urged to save more. Japan's current savings ratio is, of course, still higher than the roughly 4 percent observed in the U.S., but substantially lower than France's 12.2 percent and Germany's 10.4 percent.