Global Saving Glut

The global saving glut refers to the phenomenon where there is an excess of savings relative to investment opportunities, primarily driven by high savings rates in emerging economies and oil-exporting countries. This imbalance has led to low interest rates and has been linked to increased borrowing in developed economies, contributing to financial bubbles and economic imbalances. The concept gained prominence in explaining the conditions leading up to the 2008 financial crisis, highlighting the impact of global capital flows on economic stability.

Example

High savings rates in China and other Asian economies contributed to a global saving glut, leading to significant capital inflows into the U.S., which fueled low interest rates and the housing bubble.