Posted by: Dirk | April 6, 2010

Paradoja del Ahorro

El Pais reports that Spanish households started saving on a very big scale last year, according to date from the national statistics institute – Instituto Nacional de Estadística (INE):

En el último trimestre del año pasado, se ahorró uno de cada cuatro euros disponibles (uno de cada cinco en el conjunto del año). La tasa se situó en el 24,7% sobre la renta disponible, 1,3 puntos más que hace un año, y el nivel más alto desde 2000, cuando comenzó la serie histórica. Los expertos consultados creen que se ha alcanzado el techo en ahorro y que en 2010, con menos deducciones fiscales y más impuestos, los hogares no repetirán estas cifras, aunque cierren el ejercicio cerca del 18%, opina la Fundación de las Cajas de Ahorros (Funcas).

So, one out of four euros of disposable income was saved in the last third of 2009. Consumption was down 5.5% (it is not stated when). As the economy is still creating more unemployment, the paradox of thrift might result: as Spanish households save more they consume less, which creates unemployment and even more fear so in order to pay down debt more quickly, households increase the percentage of income they save. However, since less employment is available, the amount of aggregated savings diminishes. Imports have been falling 13%, so the Spanish situation will be felt in other European countries as well. This is potentially dangerous for net exporters – which is mainly Germany.

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