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Published on September 7, 2007

Combined public and private savings should reach 36 per cent of gross domestic product, given the investment ratio of 40 per cent.

"Higher savings would sustain the investment ratio, and Thailand can comfortably seek the balance from overseas," said Thanawat Phonwichai, director of the university's Economic and Business Forecasting Centre.

Out of public and private savings of Bt2.5 trillion, the share of corporations and individuals is only Bt132 billion.

The government could stimulate the saving habit or make it easier for savers to invest in government bonds.

It should also promote more village savings banks as it is a convenient channel to boost community savings, the centre said.

The low savings figure could stymie future economic growth, said Thanawat.

"Savings are a major source of funds to assure future investment. Although the university's survey found most of the population has savings, it was because of weak sentiment in the economic outlook rather than for future investment," he said, adding that low savings will lead to a current-account deficit in three years.

The university's Chamber Business Poll found that 99.9 per cent of respondents have some savings, but very little compared to their income.

The survey of about 1,200 people from August 29 to Monday found that most felt uncertain about the country's situation, so they had added to their savings this year.

Those with more savings represented 52 per cent of the respondents, while 34.4 per cent said their savings were the same as a year ago and 13.3 per cent had less savings.

The survey showed that 38 per cent saved more because of the unclear situation, 28 per cent because of a lack of future confidence, 20 per cent because of more income and 14 per cent because of lower spending.

People who saw their savings decline cited the hike in consumer prices, an increase in daily spending and lower income.

Saowanee Thairungroj, vice president of the university, said people had turned to saving more this year because they have cut back on consumption. However, that will not help the economy in the coming years as the liquidity is mainly for life security rather than future investment.

To urgently promote household saving, the government must raise public confidence so that people will feel more comfortable about saving and investing for future economic growth, she said.

Petchanet Pratruangkrai

 The Nation