National savings rate,
Definition of National savings rate:
A savings rate that refers to the percentage of gross domestic product (GDP) savings by households in a country. It indicates the financial state and growth of the country, as household saving is the main source of government borrowing to fund public services. The NSR varies among countries and is influenced by various factors such as retirement age, borrowing constraints, income distribution over lifetime, demography and welfare state. For example, a country that pays retirement pensions generated from tax levied on people of working age will have lower NSR compared to countries where people have to save to personally provide for their retirement.
The national savings rate takes into consideration the personal income and expenditures of individuals, the earnings of businesses, and the taxes and expenditures of the government. The rate can be somewhat misleading as governments usually operate at a deficit, which would lower the national savings rate.
The national savings rate measures the amount of income that households, businesses, and governments save. It is an economic indicator tracked by the U.S. Commerce Department's Bureau of Economic Analysis (BEA). It essentially looks at the difference between the nation's income and consumption and is a gauge of a nation's financial health, as investments are generated through savings.
How to use National savings rate in a sentence?
- The national savings rate is an indicator of a nation's health as it shows trends in savings, which lead to investments.
- Household savings can be a source of borrowing for governments to provide funds for public works and infrastructure needs.
- The national savings rate is the GDP that is saved rather than spent in an economy.
- It is calculated as the difference between a nation's income and consumption divided by income.
Meaning of National savings rate & National savings rate Definition