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Bank accounts above Rp5 billion on the rise, economist explains

Tempo - May 10, 2023

Moh Khory Alfarizi, Jakarta – Head economist of Bank Permata, Josua Pardede, on Tuesday, said wealthy people with savings of over Rp5 billion as of March this year grew 9.63 percent.

However, according to the same study conducted by the Deposit Insurance Cooperation (LPS), the growth of people with savings accounts below Rp100 million only grew 3.6 percent.

Moreover, those who have savings accounts ranging between Rp200-Rp500 million grew by 5.7 percent while the least growth percentage was logged by bank savings between Rp500 million-Rp1 billion which grew 1.7 percent.

"The relatively high growth of savings above Rp 5 billion is believed to be driven by the solid growth of current accounts, which grew 10.72 percent (year-on-year, YoY)," on Tuesday, May 9.

According to Josua, current account growth was higher than other savings components, which signals that the increase in savings was driven by current account growth due to the solid profitability of businesses in the first quarter of 2023.

Compared to the average savings growth between 2017-2019, the figures logged in 2023 is still considerably low. "This indicates that the disposable income of the middle to lower middle class has not recovered since the pandemic," said Josua.

Center of Economics and Law Studies (Celios) Director Bhima Yudhistira also provided other alternative explanations for why wealthy people's savings of over Rp5 billion had grown past other demographics. He said wealthy people were smart in keeping assets during the Covid-19 pandemic.

They managed to avoid the excessive risk of an economic crisis at the peak of the pandemic. "They put it into assets with good returns, some also get a fairly high profit, for example when investing in the health sector," said Bhima.

Source: https://en.tempo.co/read/1724150/bank-accounts-above-rp5-billion-on-the-rise-economist-explain