Irish households saved twice as much in 2020 compared to the previous year according to new figures from the Central Statistics Office (CSO), totalling a massive €28 billion, roughly equivalent to the Gross Domestic Product (GDP) of Latvia.
According to the International Monetary Fund's 2020 estimates, Latvia's GDP amounted to $33 billion (€28 billion) last year, while Ireland's level of household savings also surpassed the GDPs of countries such as Estonia, Iceland and Cyprus.
The €28 billion figure would also be enough to cover the median disposable annual income (€43,552) for 642,909 households, based on the CSO's 2019 figures.
The increase in the amount of money saved was down to a large percentage increase in the level of disposable income being put away which almost doubled during the year, jumping from 12 per cent to 23 per cent.
The CSO notes this increase in savings has largely been dictated by decreased spending opportunities for consumers due to Covid-19 restrictions, but also due to 'precautionary savings' as households anticipated a possible tightening of finances in the future.
An infographic showing the movement of finances within the economy. Image: Central Statistics Office.
Despite an increase in unemployment rates, the gross disposable income for households also rose slightly in 2020.
The introduction of support payments from the Government, such as the Pandemic Unemployment Payment (PUP) and Employment Wage Subsidy Scheme (EWSS), was a factor in this regard, coupled with the higher median income of those who were able to continue working throughout the pandemic.
The CSO data shows the largest portion of the €28 billion saved by households last year went to savings accounts, while the additional funds also went to pension funds, and repaying mortgages and other loans.
Overall, the economy grew in 2020, predominantly due to the higher gross value added by non-financial corporations, with manufacturing, or information and communication corporations accounting for much of the increase.
The CSO figures also show the Government's borrowings reached their highest levels since 2011.
