Turks saving less than in 1990s, report says

The savings rate among Turkish citizens living in metropolitan areas has hovered between 10 to 15 percent of their annual income for the past three years, well below the corresponding figure of the 1990s, the results of ING bank’s monthly survey indicates.

According to government statistics, the household savings ratio was, on average, around 25 percent for the years between 1990 and 2000.

“The savings rate is among the most significant contributors to the current account deficit and the lack of savings increases the vulnerability of the economy. Savings, because of its contribution to investments, is a crucial variable in the growth equation,” said Barbaros Uygun, the vice chair of the personal banking department at ING, at an İstanbul press conference on Monday.

According to the bank’s survey, the tendency to save money increases with income level and education. While 40 percent of those earning a monthly salary of above TL 3,000 were recently reported to be saving some of their income, it was only 6 percent for those earning less than that amount.

Among the most common reasons for not saving was an inadequate income. Investment in the future, including saving for the family’s children, was among the top motives for people to save money.

The survey also noted that the elderly tend to save less frequently but in greater amounts compared to younger individuals. The elderly have short-term priorities while younger people opt to save mostly for things such as a future investment or marriage.

According to gender-based indicators, men in Turkey tend to save more than women, and their personal savings ratio has grown, despite the increasing level of employment of women. Men’s rate of savings is indifferent to employment status, the poll said.

The bank research also shed light on Turkish citizens’ choice of savings tools, and indicated that most savers prefer to use deposit accounts or to keep it at home in “mattress savings,” outside of the financial system.

While 35.7 percent of people who save hold their money in cash, gold or precious stones, 46 percent use deposit banking. Investing in exchange market and government bonds, real estate purchases as well as personal retirement insurance were also popular means of saving, according to the report.

“It is obvious that savings are important for sustainable growth, and these savings must be in profitable investments,” said Alpay Filiztekin, a professor of economics at Sabancı University, said during the press conference, underlining that the already-low amount of savings should be part of the financial system.

SOURCE: TODAY’S ZAMAN

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