There are several other areas of concern. Apparently up to half of all emerging affluent Pakistanis save their money in their homes rather than use it for a mutual fund or other savings schemes. In comparison, only 15 per cent of Indians belonging to the same segment would resort to hoarding of cash in their homes. Their reasons are however similar: they want to access savings at short notice and are afraid of financial risks, as the study revealed. Among their preferred savings methods were savings accounts [38pc], property investment [8pc], mutual funds [4pc] and time deposits [3pc].
The disconnect between soaring inflation and the largely stagnant deposits rate offered by commercial banks has forced people into spending rather than saving. Those who do manage to save prefer to remit their money abroad and invest their savings in offshore accounts.
What is ignored in the study is the existence of the country’s large underground or cash economy which is estimated at 50% or more of the measured economy. This cash is not measured in any study though.
Published in The Express Tribune, April 26th, 2017.
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