Wealth: The Germans are getting richer overall – economy

According to a projection by DZ Bank, private households in Germany are likely to become richer overall in the current year despite the falling savings rate. Price gains on the stock markets and higher interest rates suggest that nominal financial assets will increase by around six percent to almost 7.9 trillion euros, forecast economists at the leading cooperative institute in Frankfurt. “After private financial assets had shrunk in 2022 due to share price losses after the start of Russia’s war of aggression in Ukraine, a dynamic increase in financial assets (…) can be expected for 2023,” writes DZ Bank economist Michael Stappel.

According to figures from the Deutsche Bundesbank, the financial assets of private households in Germany at the end of last year were around 7,254 billion euros, well below the record value of 7,624 billion euros at the end of 2021. Both the Bundesbank and DZ Bank take cash and bank deposits, securities and shares into account in their evaluations and funds as well as claims against insurance companies. DZ Bank’s figures are higher because it includes non-profit organizations such as foundations and non-profit associations. Neither the Bundesbank nor the DZ Bank provide information on the distribution of assets. However, in 2023 people in this country will probably put less money on the high edge than in previous years.

Stappel expects a savings rate of 10.7 percent, the Federal Association of German Volksbanken and Raiffeisenbanken (BVR) recently predicted a value of 10.6 percent for this year. Private households would therefore set aside EUR 10.70 or EUR 10.60 for every EUR 100 of disposable income. “If, according to our estimates, the savings rate falls to 10.7 percent this year and to 10.6 percent in 2024, that’s not a low savings rate, but rather a normalization,” said Stappel. The savings rate would thus level off again at the level of the years before the corona pandemic.

During the pandemic, many people had more money left over than in normal times, for example because vacation trips were canceled and leisure facilities were temporarily closed. Therefore, according to figures from the Federal Statistical Office, the savings rate in Germany had reached a record in 2020 at 16.4 percent of disposable income and remained at a high level in 2021 at 15.1 percent. Last year, the savings rate fell to 11.4 percent. The fact that the savings rate is likely to remain comparatively high in the current year is explained by the DZ Bank analysis, among other things, with the fact that tenants put money aside for any additional energy payments and homeowners make provisions for energy-related renovations. Funds often simply remain in the checking account or are parked in call money accounts, where savers can quickly switch funds if necessary.

However, the still comparatively high inflation eats away at interest income. Real interest – i.e. the interest on savings deposits after deducting the rate of inflation – remains “still deep in the red” despite the rise in interest rates, explains Stappel: “Positive real returns can only be expected if new investments benefit from the rise in interest rates and inflation rates are low again. “