Households increasing their savings reserves
Portuguese Households Experience Robust Growth in Income and Savings
According to the latest Financial Stability Report from the Bank of Portugal (BdP), households' nominal disposable income registered the highest growth rate in the last two decades in 2024, increasing by 10.5%, equivalent to a 7.8% boost in real terms. This significant uptick is mainly attributed to an increase in the wage bill and, to a smaller extent, an elevation in property income.
In addition to the income growth, families also bolstered their savings. In 2024, the savings rate reached 12.2%, marking a consecutive two-year rise and surpassing the average between 2015 and 2019. This increase in savings occurred in a context of higher interest rates and economic uncertainty, factors that promote savings for precautionary reasons, as per the BdP. It is worth noting that the difference between Portugal's national savings rates and the euro area has decreased, although Portuguese savings rates remain lower.
Households primarily allocated their savings to cash and deposits (5.9% of disposable income) and investment in real assets, particularly housing (5.9% of disposable income). On the other hand, there was a 0.3% disinvestment observed in savings certificates in 2024, following a "significant investment" recorded in 2023 (5.7% of disposable income).
Contextualizing these trends, the European Central Bank's Financial Stability Review indicates that Portugal has observed robust growth in real disposable income in recent years, combined with a high savings ratio compared to pre-pandemic levels. This suggests that households have been inclined to save more, potentially due to economic uncertainty and precautionary motives. Without specific data, it is challenging to assess the performance of savings certificates in 2024 compared to previous years. Portugal's social security system provides various benefits to families, which may indirectly influence savings habits by providing financial stability. For more details on savings certificates and their performance in 2024, consult specific financial reports or data from the Portuguese financial sector.
In the financial landscape of Portugal, robust growth in nominal disposable income, largely driven by increased wages and property income, has been observed in 2024, boosting personal-finance prospects significantly. Coinciding with this income growth, the savings rate among households climbed to 12.2%, marking a two-year consecutive rise and surpassing the average between 2015 and 2019, indicating a focus on personal-finance management and investment in properties and cash, rather than savings certificates.
