Last year, households in the Republic sustained a high savings rate that emerged during the Covid-19 pandemic, as indicated by the latest data from the Central Statistics Office (CSO). The accumulative savings of households reached €19 billion in 2023, with around 50% invested in fixed assets such as homes. The remaining funds were channelled into deposits and other financial assets.
The overall savings rate last year stood at 12.4 per cent, almost identical to the 12.2 per cent recorded in 2022, according to the final quarterly institutional sector accounts by the CSO for 2023. The average rate of savings has been over 12 per cent for two years now, surpassing the pre-pandemic long-term average.
During the Covid crisis, the rate of saving out of disposable income surged to an unprecedented 34 per cent in Q2 of 2022 due to enforced closure of stores, bars, accommodations and other enterprises based on public health regulations.
Peter Culhane, a statistician at the CSO’s national accounts analysis and globalisation division, states that “In 2023, households saved 12.09 per cent of their earnings during October, November, and December, and 12.40 per cent throughout the year. Rising employment numbers are fuelling an increase in household income, alongside increased asset-related earnings, such as pension funds. There has also been a rise in consumption due to higher volumes and prices.”
Moreover, last year saw a considerable drop in exports, from €202 billion in 2022 to €169 billion, alongside a slump in profits of the multinational sector. However, there was “significant growth in investment income from abroad,” according to the CSO.
“Even before inflation adjustments, 2023’s Overall Gross Domestic Product (GDP) was lower than that of 2022,” Culhane added. This downturn was attributed to large foreign-owned non-financial corporations modifying their global operations, resulting in their Irish branches significantly decreasing their procurement of manufacturing services. In contrast, more investment income flowed into these corporations from other countries which accounted for the significant fall in net exports and the modest decrease in net lending.
Culhane noted that imports of intellectual property were also “remarkable” last year.