11 November 2010 - As I’ve said previously, households are changing their behaviour and are spending less and saving more.

This is reflected in this chart - taken from the Reserve Bank’s latest economic forecasts. It shows that consumption as a proportion of GDP, which rose steadily between 2001 and 2007, is now on a long term downswing.

This is helping rebalance our economy towards saving, investment and exports and away from the excessive borrowing and consumption over much of the past decade that led us into recession.

While this adjustment means slightly flatter growth in the short term, it will provide a stronger platform for sustainable economic growth in the future.