First of all, the increase in deposits can provide more abundant loan funds for financial institutions, help meet the financing needs of enterprises and residents, promote investment and consumption, and support economic growth. Especially under the influence of the epidemic, many industries and enterprises are facing financial difficulties. Increased deposits can increase the bank's credit support for these enterprises, which is conducive to economic recovery after the epidemic.
However, the reduction of consumption will inhibit domestic demand and economic activities, and ultimately affect economic growth. Consumption is an important part of GDP, and the reduction of consumption means the decline of domestic demand, and the income and profit of enterprises will also be affected. Measures may be taken to reduce output and investment that are not conducive to stable economic growth.
Moreover, the increase of deposits and the decrease of consumption will have different effects on the money supply. An increase in deposits means an increase in the money supply, which may push up the inflation rate; However, the reduction of consumption usually means the reduction of social transactions and the frequency of currency use, which will have a deflationary effect. The final result of the superposition of the two effects needs to be analyzed with specific data.
Generally speaking, the impact of the increase of deposits and the decrease of consumption on the economy depends on the intensity of change. A moderate increase in deposits can provide financial support for the economy and is conducive to financial stability and economic growth; However, if consumption decreases rapidly, it will curb domestic demand, reduce economic activities and ultimately affect GDP growth. The ideal state is a moderate increase in deposits and a slight decrease in consumption, which can not only support economic growth, but also avoid a rapid decline in domestic demand, thus creating a benign economic cycle.
The above analysis of the complex impact of increased deposits and decreased consumption on the economy. Generally speaking, the increase in deposits is conducive to financial stability and economic growth, but the decrease in consumption will curb domestic demand and slow down economic activities. The ideal state is that the two changes are moderate, which will not restrain domestic demand too quickly, but also provide some financial support for economic development, thus creating a benign economic cycle.