Portuguese families have never saved so little
The savings ratio plummeted to a historic minimum due to families consumption, which increased twice as much as the growth of available income.
The Portuguese have never saved so little. In the first quarter of the year, families’ savings ratio was 3.8% of available income, 0.5 percentage points lower than in the previous quarter, according to data from Statistics Portugal (INE). This evolution took place mainly because of a larger increase in consumption rather than in income.
Families’ savings ratio measures the available income which is not used in the final consumption, calculated through gross saving and families’ available income ratio.
According to INE, “The household saving rate was 3.8% of disposable income, decreasing 0.5 p.p. from the previous quarter. (…) this evolution resulted from a growth of final consumption expenditure higher than the increase in disposable income (1.0% and 0.5% growth rates respectively)”.
This means consumption increased twice as much as the growth of available income between January and March, which lowered families’ savings ratio to the lowest percentage since the fourth quarter of 1999 (the first registered quarter), according to the Quarterly Sector Accounts disclosed by INE.
It is important to underline the decrease in the savings ratio of families is happening in a context of strong debt reduction of the Portuguese over the past few years.
In April, the amount of banking private loans was 116.4 billion euros, the lowest amount of the decade and which can be compared to the 141.9 billion euros peak in January 2011, a clear proof of the families’ deleveraging during the Portuguese economic crisis.
Concerning the increase in disposable income of Households, INE discloses the evolution happened”mainly due to the increase of 0.9% in compensation of employees received, which more than offset the reductions in net income property and the balance of social benefits and social contributions”.
