Average monthly income in Saudi Arabia grew by nearly 9 percent over a four-year period, but the country has one of the lowest household savings rates among G20 countries surveyed, a new KPMG report showed.
Savings play a "pivotal role in a country's long-term economic growth," the report said. While average earnings increased 8.9 percent from 2014-2018, Saudi Arabia's savings rate stands at 1.6 percent, but KPMG provided suggestions on how to boost that rate to 10 percent, which is the international standard.
The Kingdom fell behind China, Germany, Mexico, South Korea, and the US among others for household savings rate in 2018, but it was ahead of Canada, the UK and South Africa.
Increasing savings in Saudi Arabia is part of the country's ambitious Vision 2030 plan, and savings can translate into more investments which in turn positively affect a country's economic growth.
KPMG identified several factors for the low level of savings in the Kingdom, which include a low level of financial literacy. A series of programs have been launched to increase financial literacy and ensure financial inclusion.
The report found that another reason for the low level of savings is that while average salaries have increased, average monthly consumption outpaced earnings.
"While the average household monthly income during 2007–18 increased by 5.3 percent, from SAR 14,084 ($3,748) to SAR 14,823 ($3,747), the average household monthly consumption expenditure grew 38.6 percent, from SAR 10,522 ($2,799) to SAR 14,584 ($3,880), during the same period."