Both the national and domestic savings hit the bottom in the FY14 since the savings rates were the lowest in five years, the State Bank reported yesterday.
Pakistan has one of the lowest savings rates in the region (except Afghanistan). The low savings widen the saving/investment gap and does not augur well for economic development.
The SBP’s Statistical Supplement reported that the national savings have been declining since FY10 and hit the lowest in FY14. The savings rate was 13.6pc of GDP in FY10 which spiked to 14.2pc in FY11 but fell to 12.8pc in FY14. In FY13 the rate was 13.5pc.
Private savings have been declining for the last five years. It rose to the highest in FY11 at 17.1pc of GDP but it fell sharply to 12.6pc in FY14.
Under the head of private savings, the household savings kept falling during the last four years but corporate savings remained unchanged at 2pc since FY10. The household savings fell to 10.6pc in FY14 from the highest 15.1pc in FY11. It is the lowest saving rate in the last five years.
Savings are crucial for the growth of the economy but both the national and private savings never crossed 20pc of GDP while India and Bangladesh have over 20pc savings rates.
