Japan green subsidies erode savings
The splurge spurred by Japanese subsidies on energy-efficient cars and electronics risks depleting household savings so much that many consumers will have to cut spending next year, which may help push the economy into a double-dip
The splurge spurred by Japanese subsidies on energy-efficient cars and electronics risks depleting household savings so much that many consumers will have to cut spending next year, which may help push the economy into a double-dip.
The savings rate has already started coming down from 27 percent of disposable incomes at the start of the year as consumers lured by tax breaks and eco purchase points dip into savings to buy hybrid cars and flat panel TVs.
This temporary boost to consumption probably helped Japan's economy grow for the first time in five quarters in the April-June period, according to a survey before the release of the data on August 17.
The household savings rate is likely to fall to as low as 15 percent this year, according to Dai-Ichi Life Research Institute, as consumers front-load their purchases before the subsidies expire in March 2010.
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