Household Savings Rate

The household savings contributes a major part of the national savings. It has been found that in any economy the household savings rate is a prime cause behind the highs or lows of the economy.


For the developing countries the household savings rate is a decisive factor that plays a major role in influencing the overall economic scenario.

According to the recent reports, the household savings rates in the developing countries are increasing at a good pace. Countries like India are focusing on this factor and the rate is also developing with the passage of time. It is almost 30 percent at present. At the same time, it should also be mentioned that the household savings in India contributes almost 90 percent of the national savings.

On the other hand, there are some developing countries where the household savings rate is falling. In European countries and in the United States of America the household savings rates are too low and this is creating problems for the societies. There are several reasons behind this but the prime reason is the effect of consumerism. The household savings can be categorized two parts. First one is the financial asset that includes the funds of different financial organizations. At the same time, the currency holdings of the individuals and the families are also included in the financial assets. Another type of household savings is the physical asset.

Household Savings Rate in Different Countries

Country	1990	1995	2000	2005	2006	2007	2008	2009
Australia	8.2	6.4	1.8	-1.1	-0.2	1.8	2	2.2
USA	7	4.6	2.3	0.5	0.4	0.4	1.8	1.2
France	9.4	12.8	12	11.8	11.9	12.7	12.3	12.3
UK	8	10.2	5.1	5.6	4.8	2.9	2.5	2.5
Germany	13.7	11	9.2	10.5	10.5	10.9	10.9	10.6
Canada	13	9.2	4.7	1.6	2.3	1.5	1	1.1
Japan	13.9	11.9	8.6	3.9	3.3	3.1	2.6	2.6
Switzerland	9.6	11.6	11.8	8.4	9.2	9.7	9.6	9.5

(Source: thehindubusinessline.com)

Consumerism and savings are always contrary to each other. In the developed economies, the societies are consumption driven. There are ample scope of getting loans and expending through the credit cards. People are using these options frequently and unnecessarily. Because of this, the household savings rates are going down and causing threats to the economic stability of the countries.