Savings: how could we take advantage of it to make it an engine of the economy?

When talking about the economy, there are four important variables that every analyst takes into account, regardless of the political or ideological angle or branch of thought from which the debate is approached, which are savings, investment, spending and debt, which They must have a balance if you want stability, whether at a macro level or in the simple home economy.

Thus, most theories say that savings and investment should be factors that grow constantly, while debt and spending should advance moderately, preferably at levels lower than the first two. That is, money should be prioritized to save and invest, without wasting or abusing debt.

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With all of the above, a recent report from BBVA Bank warns that domestic savings are the key piece that keeps the economic machinery of any country running and recommends paying more attention to it this year.since from there comes the possibility of ensuring constant and stable growth.

“In the third quarter of 2024, savings in Colombia reached 15.4% of GDP, its highest point in the year. However, when considering the average of the last four quarters, this figure drops to 11.3%. This shows that, although there is progress, the structural challenge of savings persists, and with it, the ability to finance the investment necessary for sustainable growth,” they highlighted.

Mauricio Hernández-Monsalve, BBVA Research analystexplained in this report that countries that have managed to transform themselves into economic powers, such as South Korea or Singapore, share a common denominator and that is that internal savings rates that at the time exceeded 30% of GDP.

“These levels, together with coherent public policies, made it possible to finance strategic investments. Colombia, in contrast, faces the challenge of consolidating its savings, especially in sectors such as households and the government,” said this expert.

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The BBVA Research spokesperson adds that the recent quarterly increase to 15.4% of GDP comes mainly from the private sector, with non-financial corporations representing savings equivalent to 14% of GDP, while Households contributed 3.4%, although they show signs of weakness compared to previous quarters.

“This effort is overshadowed by the lack of savings in the public sector, which subtracts 3 percentage points from the total. That is why correcting the fiscal imbalance is crucial to prevent private savings from being neutralized by deficit public management, since savings not only finances investment, but is the bridge to a higher potential GDP,” he said.

Economic growth

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Hernández-Monsalve closed by saying that without a solid foundation of internal savings, Colombia will continue to depend on external savings, which exposes its economy to international volatility and the insufficiency of savings could perpetuate a cycle of low growth, limiting the country’s ability to close structural gaps in employment, infrastructure and productivity.

“It is time for the country to become aware of the strategic importance of savings. Just as a river grows with the tributaries that feed it, the joint effort of households, companies and the government is key to consolidating savings as a pillar of development. This effort must be translated into a foundation that sustains economic growth and reduces future vulnerabilities,” he concluded.

For now, the national spending accounts, as shown by the Government in the General Budget of the Nation, show that the resources for this year will focus mainly on spending and the search for debt, following the opposite path to what was suggested in the report, although these experts say that the course can still be corrected.