Source: Radio New Zealand
A graphic circulating online from Visual Capitalist shows New Zealand ranked last in a comparison of countries’ net household savings rate. Unsplash/ Li Rezaei
New Zealand is bottom of the world when it comes to how much we’re saving.
Or is it?
A graphic has been circulating online from Visual Capitalist, based on OECD data collected in recent years, showing how countries compare for their net household savings rate.
Sweden tops the table, with a savings rate of 16 percent.
Hungary is next at 14.3 percent and Czechia third with 13.7 percent.
New Zealand is at the bottom, with a rate of -1.3 percent. South Africa is second worse at -1 percent and Latvia is third with a rate of zero.
Australia is middle of the table, at about 6 percent.
Westpac chief economist Kelly Eckhold. Supplied / LinkedIn
But Westpac chief economist Kelly Eckhold said it was potentially not an accurate comparison.
New Zealand’s data was taken from 2023, the worst for saving levels in recent years.
He said it was just as the interest rate tightening cycle was really starting to hit and households were potentially drawing money out of savings to help.
Westpac data showed the savings rate had improved markedly from that low.
But Gareth Kiernan, chief forecaster at Infometrics, said it was acknowledged that New Zealand had a low savings rate by international standards.
“There has been a long-term historical issue with us that our savings has been poor.
“In fact, a lot of time through the 90s and 2000s in particularly, it was in negative territory which means we were spending more than we were earning.
“It’s improved a bit since given the establishment of KiwiSaver, so there is more financial savings going on.”
He said New Zealanders tended to do a lot of “saving” in the property market on the expectation that house pries would go up.
RNZ / Rebekah Parsons-King
“That’s not captured by the numbers here. If you’re getting wealthier through that asset appreciate in value, that’s been all well and good at times over the last three decades given what house prices have done.
“But if they’re not going to appreciate going forward and you always need someone else to sell them to, that’s not a great position to be in.”
He said house prices relative to incomes were still pretty high and affordability was poor. “It’s not a particularly sustainable position. You’re still left from New Zealand’s point of view in being in a structurally not a great position.”
He said policy settings such as those around superannuaation would help to drive savings in some countries.
“In other cases there might be a bias from households to save via financial assets, shares and other investments, not via housing.”
Lifting the KiwiSaver contribution rates over time would help. “If that did change and if people’s attitudes around property, whether it [is] because of where the price is because of the experience of prices dropping 15 percent, if it’s not a sure way to accumulate wealth, you might see gradual improvement over time but it’s very much a medium-term thing.”
He said New Zealanders also had an expectation that the government would look after them in retirement to a degree. “Although there’s more warnings coming about how unsustainable that position is. But if the government is doing the saving for you, why you would bother? That’s over-simplifying it but it does have an impact on people’s behaviour.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
