The Gross National Savings, or national savings rate, serves as an indicator of the financial stability and prospects for internal growth of a country. Specifically, it refers to the percentage of savings a nation as a whole withholds from its gross national disposable income for future use. The gross national savings consist of personal savings, business savings, and government savings, while excluding foreign savings. The Gross National Savings (GNS) figure is typically presented in relative terms, as a percent of a nation’s Gross Domestic Product (GDP). Negative percentages often indicate a weak economy that is spending more income than what it is able to produce. A negative number can also be an indicator of low national wealth, as less money saved year-to-year ultimately results in low savings accruals over a longer period of time. Below, we have taken a look at the economies with the lowest gross national savings.
Outbreak in Guinea
Among the countries registering the lowest gross national savings, Guinea ranks first with a relative GNS of -14.9% of GDP, according to Central Intelligence Agency (CIA) data. Although Guinea’s economy was challenged by a recent Ebola epidemic, the economic potential of the country is still encouraging. Growth is projected to remain low, but the country could progress its economic activity as it continues to recover from the devastating outbreak of disease. Guinea’s poverty rate has increased in recent years, as has extreme poverty, which is heavily influenced by gender, education level, and geographic location within the country. One of the main issues to be resolved for future development in the country is the control of communicable diseases and the prevention of recurrent outbreaks akin to what was seen recently with Ebola. The government has already prepared a Post-Ebola Priority Actions Plan, which focuses on bringing future epidemics under control more quickly, and addressing the immediate social needs of those affected by outbreaks.
Resources in Zimbabwe
Zimbabwe, despite a Gross National Savings of -8.9% of GDP, has strong foundations in place for internal growth and poverty reduction, due to the country’s well-educated workforce compared to its neighbors and access to an abundance of natural resources. However, to achieve future growth, perpetual improvement of the institutional and operational capacities of the public sector will be required. Improvements are needed for basic services also, not to mention far-reaching economic reform and new investment policies.
Crime in St. Vincent and the Grenadines
Third among countries with the lowest relative Gross National Savings is St. Vincent and the Grenadines, with a GNS of -2.1% of GDP. With the state largely dependent on banana exports, the country is struggling to diversify its economy. There is great potential for tourism, even though banana exports still remain the integral facet of the economy. In social contexts, St. Vincent and the Grenadines is unfortunately home to a proliferation of drug-related crimes, and the government is making many efforts to block this drug trade.
Other Low Relative Savers
Lebanon and Sao Tome and Principe are two other countries with negative gross national savings, each with a rate of around -2% of GDP. Lebanon has a free-market economy and the government doesn’t restrict foreign investments in virtually any manner. Still the economy suffers from corruption, high taxes, weak protection of intellectual property rights, and a compendium of legislation in need of modernizing. The economy is largely service industry-oriented, with the main two sectors being the tourism trade and banking services. Sao Tome and Principe, meanwhile, is a small island with a poor economy that remains strongly dependent on cocoa production. The cocoa industry here has shown substantial declines in recent years, and the economy has suffered. Due to its location, the country definitely has high prospects for development of a thriving tourism industry, and the government is taking steps to emphasize its attractiveness to foreign visitors. Across the board, the main economic problems the country is facing include the control of inflation and a lack of fiscal discipline at all levels. Other countries with gross national savings falling below 3%of GDP are Sierra Leone, Libya, Grenada, Dominica, Burundi, and Eritrea. Many of the countries on our list will require extensive economic development and financial reform in order to garner enough savings to build up their long-term financial security.