High interest rates are unable to stimulate economy

The individual clients’ appetite for saving is increasingly weak, with the annualised rise of deposits slowing down significantly over the last year, despite the high interest rates offered by banks. At the end of February, the population’s RON deposits were up 17% in real terms (eliminating the effect of inflation) on February of last year, according to data from the NBR (National Bank of Romania). In comparison, the annual growth rate amounted to almost 31% then, and came in the wake of rates of as much as 45% reached in the summer of 2007. At the end of February, the population’s RON deposits had reached 56 billion RON (equivalent to 13 billion euros). For deposits in foreign currency, the slowdown was even more significant. The annualised growth rate (calculated in euros) fell to 7.7% in February, down from 43% in February 2008. The overall volume reached almost 7.8 billion euros in February. Analysts say now clients have less and less money to set aside. “I expect a major slowdown in the annual growth rates for the population’s deposits, despite the interests offered by the banks, which can be considered attractive. The slowdown will be triggered by a wage decline in real terms, which, coupled with a rise in unemployment, will lead to a decline in the population’s saving capacity,” says Nicolaie Alexandru-Chidesciuc, senior economist of ING Bank.