Fernando de Querol Cumbrera
Research expert covering construction, loans, leasing, savings, and debt
Savings during coronavirus (COVID-19) outbreak - statistics & facts
Due to the coronavirus (COVID-19) pandemic, numerous workers worldwide either lost their jobs or saw their income decrease. Among the most vulnerable groups were those operating in the tourism and hospitality, transportation, and retail sectors. On the other hand, office workers could benefit from remote working. Overall, the pandemic led to a decrease in day-to-day spending for most people. As a consequence, saving rates increased around the world, particularly in advanced economies.
Why the increase in savings?
Stuck at home, many consumers were left with a considerable amount of their income available, which led to so-called excess savings. The increase in savings is due to two factors. On the one hand, lockdowns and movement restrictions prevented consumers from spending their money, except for basic necessities, or on e-commerce platforms. People could benefit from reduced day-to-day spending, such as transportation for commuting, eating out, and culture and entertainment. This phenomenon is known as forced or involuntary saving. On the other hand, the economic crisis caused by the pandemic led to uncertainty about the future, mostly in terms of employment, which led to precautionary or voluntary savings.
Will additional savings lead to increased spending in the future?
Spending behavior is hard to predict, even more so in times of crisis. Precautionary savings tend to be kept in bank accounts for future emergencies. Also, those who saved more are generally high-income earners. This means that accumulated savings will not necessary be spent once restrictions are eased. In fact, surveys on future spending plans suggest that only a minority of savers are planning to spend the additional savings accumulated during 2020, while the vast majority is inclined to keep them in their bank accounts.
Why the increase in savings?
Stuck at home, many consumers were left with a considerable amount of their income available, which led to so-called excess savings. The increase in savings is due to two factors. On the one hand, lockdowns and movement restrictions prevented consumers from spending their money, except for basic necessities, or on e-commerce platforms. People could benefit from reduced day-to-day spending, such as transportation for commuting, eating out, and culture and entertainment. This phenomenon is known as forced or involuntary saving. On the other hand, the economic crisis caused by the pandemic led to uncertainty about the future, mostly in terms of employment, which led to precautionary or voluntary savings.
Will additional savings lead to increased spending in the future?
Spending behavior is hard to predict, even more so in times of crisis. Precautionary savings tend to be kept in bank accounts for future emergencies. Also, those who saved more are generally high-income earners. This means that accumulated savings will not necessary be spent once restrictions are eased. In fact, surveys on future spending plans suggest that only a minority of savers are planning to spend the additional savings accumulated during 2020, while the vast majority is inclined to keep them in their bank accounts.
Fernando de Querol Cumbrera
,
Feb 29, 2024
Fernando de Querol Cumbrera
Research expert covering construction, loans, leasing, savings, and debt
