Is New Zealand at the bottom of the world when it comes to how much we’re saving?
A graphic shared online by Visual Capitalist, using recent OECD data, shows how countries stack up in terms of net household savings rates.
Sweden ranks first on the list, with a savings rate of 16%.
Hungary follows at 14.3%, with Czechia coming in third at 13.7%.
Australia sits around the middle of the table, with a savings rate of roughly 6%.
New Zealand sits at the bottom with a savings rate of -1.3%. South Africa is second-lowest at -1%, while Latvia ranks third-lowest at 0%.
However, Westpac chief economist Kelly Eckhold said the comparison may not be entirely accurate.
New Zealand’s figures are from 2023, a year that saw some of the lowest savings levels in recent times.
He said this was around the time the interest rate tightening cycle began to take effect, when households may have been dipping into their savings for support. Westpac data indicates that the savings rate has recovered from that low point.
However, Infometrics chief forecaster Gareth Kiernan said it is widely recognised that New Zealand’s savings rate is low 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 particular, 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 saving going on.”
He said New Zealanders often “save” through property, expecting house prices to rise over time.
“That’s not captured by the numbers here,” he said.
“If you’re getting wealthier through that asset appreciating 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 remain high relative to incomes, with affordability still weak.
“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 related to superannuation, help encourage higher 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.”
He said gradually increasing KiwiSaver contribution rates would help boost savings over time.
He said New Zealanders also tend to expect the government to provide some level of support in retirement.
But if the government is doing the saving for you, why would you bother? That’s oversimplifying it, but it does have an impact on people’s behaviour.”