Swiss savers could fuel post-COVID economic recovery
ZURICH, April 22 (Reuters) – Swiss consumers are expected to boost the country’s economic recovery after COVID-19, economists say, using mountains of money saved during the crisis to fuel a spending spree.
The wealthy Switzerland’s savings rate – the average amount of unspent disposable income – rose nearly 50% last year, from 13.8% to 19.9%, with restrictions aimed at curbing the pandemic having reduced consumption, according to the KOF Economic Institute.
Households saved 89 billion Swiss francs ($ 97.27 billion), a jump from the 60 billion francs set aside in 2019.
“During the COVID crisis last year, there were simply fewer opportunities to spend money,” said KOF economist Michael Graff.
“People might have bought more books from Amazon or more takeout pizzas, but they couldn’t travel or eat out, for example.
“We believe there will be a big rebound in spending after the restrictions are completely lifted. People are already discussing what to spend the extra money on. “
Credit Suisse estimates that savings rose even more, to 30%, during the blocking peak from mid-March to mid-May, before leveling off at 20% on average over the year.
Each household accumulated on average an additional 3,000 francs after the first lockdown and an additional 880 francs during the second shutdown later in the year, Credit Suisse said.
The government also expects the deployment of savings to be a “major contributor to economic recovery this year and next,” said Ronald Indergand of the State Secretariat for the Economy.
Government support measures such as short-time working and compensation for loss of income have helped cushion the effects of the crisis on many households.
Credit Suisse economist Claude Maurer estimates that an additional 12 billion francs were saved in the first lockout and an additional 3.5 billion francs in the second, which is now partially lifted.
About two-thirds of that money will be spent, he said, increasing private consumption by 3.5% this year.
Switzerland traditionally saves more than other countries, because high incomes leave more money after paying for basic necessities.
Most of the impact of the additional spending is expected to occur in the second and third quarters of this year, KOF’s Graff said.
KOF expects Swiss GDP to grow 3.7% in 2021 and 2.5% in 2022, both above the long-term average of around 1.7%. Credit Suisse estimates increases of 3.5% in 2021 and 2% in 2022.
Other European countries have also seen their economies grow, which could help fuel their economic recovery.
The French think tank OFCE estimates that the French economy could grow by 6.0% next year if households spend a fifth of the additional savings accumulated in 2020 and 2021.
German GDP growth could reach 5.5% and Britain’s 5% if people withdraw money they have put aside, the OFCE said.
“If you stop people buying and then facilitating… there will be an increase in people going out and buying more things,” Maurer said. ($ 1 = 0.9150 Swiss francs) (Reporting by John Revill; Additional reporting by Leigh Thomas in Paris; Editing by Catherine Evans)