Canadian Politics from Canada's Centre

Sunday, March 26, 2006

Canada's Savings Rates since NAFTA

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It appears that NAFTA may have impacted our National Savings Rate (NSR), as well as the Households Savings Rate (HSR). The NSR has increased while the HSR has decresed. If you don't know what the National Savings Rate and Household Savings rate is, don't worry, I've explained what they are. Those with an interest in NAFTA's effect on the Canadian economy will find an interest in this.
This is the follow up post to the article discussing Canadian GDP and GDP per capita since the implementation of NAFTA in 1994.

The National Savings Rate (NSR), or Gross National Savings, as the OECD calls it, measures what percentage of GDP a nation saves. For reasons beyond the scope of this analysis, the OECD bases this measure on the nominal GDP (i.e. not adjusted for inflation - go figure). The Household Savings Rate (HSR), for its part, measures what percentage of their income households (and by extension, individuals) are saving. In this it is a subsection of NSR, since the NSR is the sum of government and private (individuals and business) saving. The method for calculating the savings rate, both for NSR and HSR, is to divide savings by income (adjusting the figures accordingly to whether it’s national savings and income or household savings and income) With these explanations in mind, the data can now be examined and understood.

From 1994 to 2004 (the most recent year with data available), Canada’s NSR increased 6.6%, to 23.1%. However, with the exceptions of 2000 and 2001, the percentage of income Canadian households have devoted to savings has shrunk or stayed the same every year since NAFTA’s implementation. In 2005, Statistics Canada and the OECD reported that Canadians savings were –0.4%! (See also my article on what negative savings means for your taxes.)

Articles relating to , and the :
  1. The idea behind my NAFTA analysis (why I got interested)
  2. Impact of NAFTA: Introduction and Basis of Research
  3. Impact of NAFTA: Canadian Government Muddled?
  4. GDP and GDP per Capita since NAFTA

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