Economic Trends and Targets Level of Savings Higher savings are a pre-requisite for raising the level of investment, otherwise there is the risk that the trade deficit could rise to an unsustainable level. Therefore, raising the level of savings by reduction in government deficits, higher home remittances and large corporate and household savings must get the highest priority. The trend in the national rate of savings is given in Table 1.2. The rate of overall savings in Pakistan is low relative to the rate in countries like India, Sri Lanka, and Bangladesh, where it ranges from 25 percent to 30 percent. Table 1.2: The Rate of Net Savings by Source 2015-16 2016-17 1. Total National Saving 13.9 12.0 2. Foreign Saving 6.1 5.5 3. Domestic Saving 7.8 6.5 Source: PES 2017-18 11.3 5.3 6.0 2018-19 10.8 6.7 4.1 (% of GDP) 2019-20 2020-21 13.6 15.3 6.8 8.2 6.8 7.1 The last year, 2020-21, has witnessed a jump in the national savings from 13.6 percent to 15.3 percent. This is due primarily to the big jump in home remittance. Within domestic savings, the contribution by household savings, corporate savings and public savings is presented in Table 1.3 up to 2018-19. Data has not yet become fully available for the last two years. Table 1.3: Distribution of Domestic Savings 2015-16 Total Domestic Saving 7.8 Public Saving-0.9 Corporate Saving 0.5 Household Saving 8.2 Source: Estimated 2016-17 6.5 -0.8 0.6 6.7 2017-18 6.0 -1.8 0.6 7.2 (% of GDP) 2018-19 4.1 -4.7 0.5 8.3 The rate of net domestic savings has shown a declining tendency. This is due primarily to larger public net dissaving. The gap between revenue and current expenditure reached a peak in 2018-19. Corporate savings in the form of retained profits have remained largely unchanged as a percentage of the GDP. There has been some recovery in household savings, but they remain low. There was a rise in 2018-19 due to the peaking of rates of return on National Savings Schemes. 5