National Savings scheme recorded a 4.5 percent fall in FY05 after seeing a growth decelerate to 3.2 percent in FY04. The State Bank annual report FY05, issued here recently, says that the FY04 deceleration in national savings was more than offset by an exceptionally large jump in public savings.

During FY05, not only have private savings continued to decline, but public savings also fell. "As a result, national savings dropped from its FY03 peak of 20.8 percent of GDP to 15.1 percent of GDP in FY05."

According to the report, the decline in private savings stemmed from a number of factors including low and generally negative real interest rates on national savings schemes instruments; the preference for physical rather than financial assets following rising asset prices during both FY04 and FY05; and, most importantly, a sharp increase in private consumption expenditure.

Copyright Business Recorder, 2005