BUSINESS

Record drop in savings last year

EVGENIA TZORTZI

TAGS: Economy

Household savings shrank by 32.5 billion euros in total in the period from 2011 to 2017, as families increasingly resorted to dipping into their deposits after finding that disposable incomes are no longer enough to cover their outgoings. Last year the drop in savings reached an historic high of 8.3 billion euros in current prices, according to an analysis by Eurobank.

In addition, households have resorted to liquidating assets such as properties, deposits, shares and bonds, among other investments.

Notably consumption shrank by almost a quarter from 2008 to 2017, falling from 163.3 billion euros to 123.3 billion last year, which was the sixth in a row with negative savings for Greek households; this means that disposable income was less than consumption.

Eurobank data showed that the wealth of the country’s households has been in constant decline since 2011, falling at an average rate of 6.6 billion euros per year, which is transformed from various forms of savings into consumption.

The report by Eurobank’s analysis department highlighted that the economic recession, the stagnation in investments and the major fiscal adjustment Greece experienced from 2009 to 2017 have compressed households’ saving capacity, both in terms of incomes and their obligations to the state through taxes and social security contributions.

The figures reveal that Greek households’ net annual savings amounted to 11.4 billion euros in 2009, or 7 percent of their gross disposable income, while last year the balance was negative by 8.3 billion, or 6.7 percent of households’ gross disposable income.

Shrinking private consumption has had a direct impact on investments: In 2009 investments had amounted to 18.3 percent of gross domestic product and were 31.8 percent funded by domestic consumption and the rest from borrowing. In 2017 the investment rate slipped to 11.6 percent of GDP, with domestic consumption accounting for 91.1 percent.

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