Germans have become significantly richer in 2023
The economic situation in Germany in 2023 is anything but rosy. However, a favorable constellation of rising interest rates, falling inflation and strong price gains on the stock markets will ensure that saving is worthwhile again and that private household assets will increase significantly.
Private households in Germany have become richer overall in 2023. Price gains on the stock markets and higher interest rates on savings have caused nominal financial assets to increase by 6.4 percent to just over 7,900 billion euros within a year, as economists at DZ Bank have calculated.
"With inflation continuing to fall and the economy gradually recovering, the prospects for private households to increase their financial assets remain good in the new year," writes DZ economist Michael Stappel. Although he does not expect financial assets to grow as dynamically in 2024 as they did in 2023, asset growth is likely to be "quite solid" at a good four percent.
The latest official figures on the development of private household financial assets in Germany are expected from the German Bundesbank in the spring. Most recently, the Bundesbank reported a value of around 7492 billion euros for the second quarter of 2023. However, this was still some way off the record level of 7624 billion euros reached at the end of 2021.
Both the Bundesbank and DZ Bank include cash and bank deposits, securities such as shares and funds as well as claims against insurance companies in their evaluations. DZ Bank's figures are higher because they include non-profit organizations such as foundations and charitable associations. Neither the Bundesbank nor DZ Bank provide information on the distribution of assets. Real estate is not included in either analysis. Those who invested in shares, funds and certificates benefited in many cases from price gains in 2023. In total, this boosted the financial assets of people in Germany by around 200 billion euros, according to DZ Bank's calculations.
High savings rate
However, the high savings rate is even more important for the asset growth of German private households than price gains and returns on securities and other investments. "Savings remain the most reliable pillar of private household wealth accumulation," the analysis states. Despite higher prices for energy and food, for example, people in Germany put roughly the same amount aside in the first half of 2023 as in the same period last year.
According to calculations by the Federal Statistical Office, the savings rate was 11.3% in the first six months of 2023. This means that an average of EUR 11.30 was saved for every EUR 100 of disposable income. This corresponds to an average monthly amount of EUR 260 per inhabitant. According to the Federal Office, the savings rate of 10.3% in the third quarter of 2023 was also higher than in the same period of the previous year (9.6%), as the disposable income of private households rose faster than private consumption.
The savings rate in Germany was significantly higher in the coronavirus years of 2020 and 2021. During the pandemic, many people had more money to spare than in normal times, for example because vacation trips were canceled and leisure facilities were temporarily closed. According to the latest figures from the Federal Statistical Office, the savings rate in Germany reached a record high of 16.5% in 2020 and remained at a high level of 14.9% in 2021.
Last year, the savings rate fell to 11.1%. DZ Bank economist Stappel expects the savings rate to remain stable at 11.2% for 2023 as a whole. An incentive for savers: following the turnaround in interest rates by the European Central Bank (ECB), overnight money and fixed-term deposits are finally earning interest again.
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Private households in Germany have increased their financial assets due to investment in securities and higher interest rates on savings, allowing them to save more effectively. As a result, the nominal financial assets of German households increased by 6.4% in 2023.
With the high savings rate remaining a key factor in the wealth accumulation of German households, the continued fall in inflation and recovery of the economy are expected to contribute to solid asset growth in 2024, despite not reaching the dynamism seen in 2023.
Source: www.ntv.de
