Net financial savings rose to 6% in FY24: Goldman Sachs
financial savings to 6% of GDP in FY24 from 5.1% in the previous year, Goldman Sachs said in a report on Wednesday.
“This (increase in net financial savings) is mainly driven by our estimate of higher gross financial savings of 12.5% of GDP (vs 11.0% of GDP in FY 2023) owing to our estimate of higher bank deposit growth,” it said.
The global investment bank’s research unit noted that gross financial savings are expected to outpace the increase in household financial liabilities in FY24.
Goldman Sachs has predicted a rise in household liabilities to 6.6% of GDP in FY24 from 5.9% in the previous year.
Rising household liabilities was one of the primary factors for the decline in net financial savings, as they jumped 1.7 times from the previous year.
The investment bank, in its research, highlighted the trend of financialisation of household savings, which it said could help fund the capex cycle without affecting the current account deficit.
The research noted that increasing financial literacy, digitalisation, formalisation and performance of equity markets were reasons for the switch.
“The overall AUM of retirement savings, insurance, and mutual funds grew at a 15% CAGR, outpacing bank deposit CAGR of 9% over the last ten years,” it said, pointing out that levels would still be lower than developed nations and Asian giants like Korea and Taiwan.
The research also pointed to increased investment in retirements and pension funds as a factor which has curbed volatility by keeping government bond yields flat.
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