Recent Investment and Saving Trends within East Asia1

Since the mid 1990s, the global distribution of current account balances has changed substantially. Along with the sharp increase in the current account defi cit in the US, there has been a signifi cant widening of the current account surpluses in many countries, including Japan, China and the major oil producers. In addition, there has been a marked shift from persistent current account defi cits to large current account surpluses in the rest of the east Asia region, which for the current purpose is defi ned as comprising Hong Kong, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand. The large movements of the current account positions in this region have mainly refl ected reductions in its investment to GDP ratio; the change in the region’s saving ratio has had only a small effect. This trend has attracted considerable attention, including whether the region’s investment spending can be raised.2