Savings and the household balance sheet
The past decade and a half has seen a consistent decline in the household savings rate in New Zealand. This trend is not isolated to New Zealand, but is also occurring in other OECD countries. In addition, household indebtedness has risen at a faster rate than in other OECD countries. It is dif?cult to know how much further the savings rate will fall and household indebtedness will increase, but an adjustment in behaviour is likely at some point. The low household savings rate has contributed to an ongoing reliance on foreign savings. The banking system appears to manage the risks associated with using foreign savings well. However, as New Zealand's reliance on foreign savings increases, the economy at large potentially becomes more exposed to changes in international investor preferences, while households may become more sensitive to changes in interest rates, the labour market or house prices.
Volume (Year): 68 (2005)
Issue (Month): (June)
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References listed on IDEAS
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- Iris Claus & Grant Scobie, 2002. "Saving in New Zealand: Measurement and Trends," Treasury Working Paper Series 02/02, New Zealand Treasury.
- Leslie Hull, 2003. "Financial deregulation and household indebtedness," Reserve Bank of New Zealand Discussion Paper Series DP2003/01, Reserve Bank of New Zealand.
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