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Finances: Saving zeal causes financial assets to continue to rise

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Private households in Germany are richer than ever. But the economic consequences of the Ukraine war have left their mark on financial assets. The prospects for 2023 are mixed.

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With enormous savings efforts, people in Germany continued to increase their record-high financial assets in the past year. However, according to calculations by the cooperative DZ Bank, which is available to the German Press Agency, the increase in the financial assets of private households, at almost two percent to almost eight trillion euros, was significantly lower than in the previous years marked by the corona pandemic.

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In the years 2020 (plus 6.7 percent) and 2021 (plus 8.5 percent), private financial assets in Germany had increased significantly more. That was in large part because many people had more money to spare during the pandemic than in normal times, for example because holiday trips were canceled and leisure facilities were temporarily closed.

Save like the world champions

In 2022, it was only possible to prevent financial assets from melting because many people in Germany were again saving like the world champions, as analyzed by DZ Bank. In many cases, losses on the stock markets after the outbreak of the Ukraine war could not be fully made up for in the course of the past year.

“With the economic recovery that is expected to start in the spring and the energy-price-driven inflation subsiding, the prospects for 2023 will brighten again,” said DZ economist Michael Stappel. “This should have a positive impact on the stock markets and support asset growth.”

In addition, the increased savings interest tends to help, although the persistently high inflation eats it up again immediately. According to DZ Bank, the real interest rate – i.e. the interest rate less inflation – should initially remain in negative territory in 2023. Nevertheless, Stappel expects that financial assets will “grow noticeably more strongly again” in 2023.

According to Stappel, the savings rate could also increase again in the current year. According to DZ Bank estimates, the savings rate in 2022 will be a good 11 percent, slightly higher than in the pre-crisis year of 2019 (10.8 percent). People in Germany would have saved 11 euros for every 100 euros of disposable income, although many households find it difficult to put money on the high edge due to high energy and food prices.

According to figures from the Federal Statistical Office, the savings rate in Germany reached a record high of 16.4 percent of disposable income in 2020. In 2021, the savings rate was also comparatively high at 15.1 percent.

Post-corona consumption is largely flat

Economists had initially assumed that the savings rate would fall even more significantly in 2022 after corona restrictions were lifted, because many people would catch up on consumption that had been postponed. The BVR banking association, for example, issued a forecast at the end of September that the savings rate in Germany could fall back into the single digits in 2022 for the first time since 2014.

But the Russian attack on Ukraine and the associated price increases caused the consumer climate to collapse. “The strong post-corona consumption hoped for after the corona crisis, with which private households can make up for their deprivations during the pandemic, will initially fall flat,” says the DZ Bank analysis.

The Deutsche Bundesbank is expecting the latest official figures on the development of the financial assets of private households in Germany in the spring. Both the Bundesbank and DZ Bank take cash and bank deposits, securities such as shares and funds, and claims against insurance companies into account in their evaluations. There is no information about the distribution of assets.

Source: Stern

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