At the end of October, the Global Finance Magazine published household savings rates for 2018.
Understanding The Report
There are a lot of countries that are left off the list, mostly due to lack of statistics.
Each row in the list gives the savings rate, in percentage, of households for a given country.
For example, if you were an average person living in Italy in 2012, you probably saved 1.98% of your household income.
In 2018, that amount dropped to 1.66%
The percentages can also be negative.
For example, if you were an average household living in Lithuania in 2012, you probably spent 1.96% of your savings.
The reasons to spend savings vary from going on that dream vacation, getting an education, purchasing a house, or living off retirement savings.
As the article notes, there are a lot of factors that can't be taken into consideration when putting together numbers like this.
So, this is not as reliable as, say, a temperature measurement.
What it does show, over time, is general trends of economic activity.
The table also attempts to project where things will go in 2019.
Since this is a projection, this should not be taken too seriously.
On the other hand, large groups of people tend to change their habits slowly.
As a result, trends from previous years can often be projected much more accurately than is expected.
The report highlights a number of outliers worth mentioning.
On the high notes, Luxembourg, Sweden, and Switzerland have consistently had saving rates over 10%!
Sweden and Switzerland have increased their savings rate since 2012.
Latvia has also increased its savings rate from -14.52% to -4.5%
The general global trend is toward fewer savings and even spending savings.
This makes sense given the enormous number of people currently retiring.
In Canada, for example, it is estimated that 1,000 people a day are leaving the workforce and starting to live off their savings.
This could be in the form of pensions or personal savings.
Where's all the Money Going?
Photo by Sharon McCutcheon on Unsplash
Some see this as a destruction of wealth but it is better described as a redistribution of wealth.
For example, in many countries, the massive inflows of money into pensions and mutual funds have been drying up for a while now.
And the outflow is just beginning.
This has been a source of cheap and ready capital for companies for many years.
It likely means that capital will be harder to raise in the next few decades.
The money, rather than disappearing though, will move out of private hands and be used to pay for goods and services.
The winners in this growing economy will be those providing what retired people want.
What do you think about the savings rate in your country?
Any ideas and suggestions to improve the situation?
The Report
Country |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
|---|---|---|---|---|---|---|---|---|
| Australia | 7.03 | 7.35 | 7.76 | 6.68 | 4.94 | 2.98 | 2.44 | 2.02 |
| Austria | 8.86 | 7.11 | 6.82 | 6.87 | 7.92 | 6.36 | 6.62 | 6.24 |
| Belgium | 5.69 | 5.14 | 4.93 | 4.43 | 3.69 | 3.87 | 4.17 | 4.17 |
| Canada | 4.72 | 4.80 | 3.59 | 4.60 | 3.36 | 3.43 | 3.15 | 3.41 |
| Czech Republic | 5.99 | 5.62 | 6.59 | 6.84 | 6.02 | 5.45 | 4.79 | 3.88 |
| Denmark | 0.12 | 2.34 | -2.90 | 4.65 | 5.01 | 5.60 | 5.90 | 5.95 |
| Estonia | 5.06 | 4.39 | 6.29 | 7.44 | 7.27 | 7.55 | 7.67 | 7.61 |
| Finland | 0.71 | 1.52 | -0.14 | -0.49 | -1.43 | -1.52 | -0.17 | -0.22 |
| Germany | 9.29 | 8.95 | 9.47 | 9.62 | 9.69 | 9.86 | 9.94 | 9.95 |
| Hungary | 5.24 | 7.11 | 8.18 | 6.27 | 7.05 | 7.74 | 7.16 | 6.07 |
| Ireland | 6.73 | 5.01 | 2.81 | 2.27 | 2.11 | 3.99 | 3.92 | 3.72 |
| Italy | 1.98 | 3.61 | 3.85 | 3.20 | 3.09 | 2.37 | 1.66 | 1.06 |
| Japan | 2.71 | 0.30 | -0.35 | 0.82 | 2.56 | 2.61 | 2.73 | 2.32 |
| Korea | 3.90 | 5.60 | 7.18 | 9.32 | 8.74 | 8.94 | 8.86 | 8.87 |
| Latvia | -14.52 | -15.27 | -12.45 | -9.89 | -7.64 | -7.17 | -5.55 | -4.50 |
| Lithuania | -1.96 | -1.23 | -3.65 | -3.88 | -4.34 | -4.15 | -4.00 | -3.87 |
| Luxembourg | 14.36 | 14.50 | 14.61 | 14.55 | 14.91 | 14.25 | 13.61 | 13.86 |
| Netherlands | 7.17 | 7.30 | 7.90 | 6.51 | 6.43 | 6.12 | 6.14 | 6.15 |
| New Zealand | 0.45 | 0.09 | -1.45 | -1.27 | -2.79 | -3.18 | -2.54 | -2.05 |
| Norway | 7.12 | 7.42 | 8.21 | 10.34 | 7.07 | 7.30 | 7.99 | 8.29 |
| Poland | -1.11 | -0.07 | -0.36 | -0.44 | 1.67 | 1.82 | 2.53 | 3.59 |
| Slovak Republic | 0.75 | 0.21 | 1.45 | 3.23 | 3.79 | 3.79 | 3.82 | 3.78 |
| Slovenia | 2.13 | 4.79 | 4.54 | 4.63 | 4.94 | 3.89 | 3.85 | 4.37 |
| Spain | 2.35 | 3.84 | 3.49 | 2.77 | 1.75 | -0.57 | -1.34 | -1.42 |
| Sweden | 14.40 | 14.97 | 16.46 | 15.06 | 16.62 | 15.91 | 16.58 | 16.14 |
| Switzerland | 17.35 | 17.53 | 18.88 | 17.65 | 18.79 | 18.66 | 18.53 | 18.18 |
| United States | 7.63 | 5.00 | 5.67 | 6.08 | 4.87 | 3.38 | 3.72 | 4.65 |
| Euro area (16 countries) | 6.12 | 6.16 | 6.35 | 6.01 | 5.84 | 5.54 | 5.30 | 5.19 |