New Zealand’s Savings Rate Ranks Last Globally—But Is the Full Story Being Told?

New Zealand has been ranked last among nations in a global comparison of household savings rates, according to a widely shared graphic from Visual Capitalist based on Organisation for Economic Co-operation and Development (OECD) data.

The graphic, which has circulated online in recent days, shows New Zealand with a net household savings rate of minus 1.3 percent, placing it at the bottom of the list. This indicates that, on average, households in New Zealand are spending more than they are earning after accounting for consumption of fixed capital.

Sweden leads the comparison with a savings rate of 16 percent, followed by Hungary at 14.3 percent and Czechia at 13.7 percent. Australia sits in the middle of the ranking with a rate of approximately 6 percent, while South Africa and Latvia follow New Zealand with rates of minus 1 percent and zero, respectively.

However, economists have cautioned that the figure may not reflect a full or enduring picture of New Zealand’s household saving behaviour. Westpac chief economist Kelly Eckhold noted that the data used in the comparison comes from 2023, a year marked by the early effects of monetary policy tightening as interest rates began to rise significantly.

Eckhold suggested that the negative savings rate could be partly attributed to households drawing on savings to cope with higher borrowing costs during the initial phase of the interest rate hiking cycle. He added that more recent data from Westpac indicates an improvement in the household savings rate since that low point.

Gareth Kiernan, chief forecaster at Infometrics, acknowledged that New Zealand has historically struggled with low household savings relative to other countries. He pointed out that the nation has experienced periods of negative savings in the past, particularly during the 1990s and 2000s, when spending consistently exceeded income.

Kiernan noted that the introduction of KiwiSaver, the national voluntary retirement savings scheme, has contributed to an improvement in formal financial saving over time. Despite this, he observed that many New Zealanders continue to accumulate wealth through property investment, motivated by expectations of rising house prices—a form of saving not captured in standard household savings rate calculations.

The Reserve Bank of New Zealand defines national saving as income less expenditure and consumption of fixed capital, with data sourced from Statistics New Zealand. This measure includes saving across households, businesses, and government sectors, though the international comparison in question focuses specifically on the household component.

While the Visual Capitalist graphic has drawn attention to New Zealand’s position in global savings rankings, local economists emphasize the importance of considering timing, economic context, and alternative forms of wealth accumulation when interpreting such data.