(Finance) – The Covid-19 pandemic induced a significant increase in household savings around the world: in the second quarter of 2020 – during the first wave of the pandemic – the savings rate in Italy more than doubled, exceeding 20%. Although it has seen a steady decline since then, the savings rate remained significantly above pre-pandemic levels until the summer of 2022; in the first quarter of 2023 it returned to 2019 values.
This is stated by a new study by the Bank of Italy – signed by Andrea Colabella, Elisa Guglielminetti and Concetta Rondinelli – where it is explained that most of this movement is attributable to changes in the flow of savings (the numerator of the savings rate) rather than changes in disposable income (the denominator).
The study states that between 2020 and 2022 more than 130 billion euros (about 11% of annual household disposable income) were accumulated and allocated to financial assets by the Italians. About 60% of these savings were held by high-income families. At the same time, low-income families were also able to save part of their income. As energy prices spiked in 2021 and 2022, the process stopped, but “excess assets” were still substantial (around 2.5% of total assets) in early 2023.
According to researchers, in the current situation, the withdrawal of assets by low-income families will probably offer a limited support for the expansion of consumption, in light of the modest amount of excess savings accumulated by these families during the pandemic. At the same time, greater support will likely come from wealthy families, who are signaling their willingness to spend more, especially on leisure-related items.
(Photo: Photo by Mathieu Stern on Unsplash)