India Economy Watch - Household Financial Savings Plunged In H1 FY23: Motilal Oswal
While Physical Savings Continued Its Robust Trend.
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
Higher inflation can impact an economy in numerous ways! Weakening consumption is the most common outcome of high inflation. However, with consumption growth remaining robust over the past few quarters (fueled by pent-up demand and K-shaped recovery), household financial savings appears to have been hurt severely, thus pulling houehold total savings down drastically in H1 FY23.
Our calculations suggest that household net financial savings plunged to a three-decade low of about 4.0% of gross domestic product in H1 FY23, from 7.3% of GDP in FY22 and Covid-led 12.0% of GDP in FY21.
Within financial savings, the decline was broad-based. Currency holdings were negligible, bank deposits dropped and investments in equities/debt were lower.
Gross financial savings were just ~9% of GDP in H1FY23, versus 10-12% in the past decade (and ~16% of GDP in FY21).
Notwithstanding lower gross financial savings, household financial liabilities picked up to 5% of GDP in H1 FY23, led by banks. Therefore, our estimates suggest that household debt jumped 15.2% YoY and stood at 36% of GDP in Q2 FY23 versus 36.8% of GDP in FY22E.
Click on the attachment to read the full report:
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.