Deposits are growing
At the beginning of 2022, in January, deposits of residents in banks amounted to 20.3 billion. Eur.
Observing their decline in the first three months, it was explained that such a trend was influenced by inflation that had already begun to grow, the lifting of pandemic restrictions, and the war in Ukraine that began at the end of February.
In April, when the savings in the banks started to rise again, it was claimed that the residents felt calmer and returned part of the withdrawn funds to the banks, as Ukraine was still in compliance.
In May and June, despite the fact that the population began to be suffocated by extremely high inflation, which already reached 20.5 percent in June, deposits continued to increase since March, when they reached 19.88 billion. EUR, increased to 20.17 billion. Eur.
According to the latest LB data, both as inflation continued to rise and as the public began to worry about the energy crisis, the savings of residents continued to rise in July and reached 20.29 billion. Eur.
The latter amount cannot be considered a savings record. The largest amount of residents’ deposits in the bank so far was recorded in 2021. in December, when it reached 20.87 billion Eur.
Preparing for economic winter
Economist Aleksandar Izgorodin said that the growth of residents’ deposits can be considered the reason for public uncertainty and fear.
“There was a lot of negative news in the public space about rising prices, about Russia’s decision to cut off gas supplies to Europe, about the coming energy crisis, about high heating and electricity bills, and it just scared people and made them stop spending more than they really wanted to.
This means that consumers as a whole have financial resources despite high inflation because, in this case, they have made a decision to put some of their income aside and focus on preparing for a tough economic winter and crisis,” he said.
Speaking about the declining retail trade indicators, the economist emphasized that they are the result of the savings of the population.
“It is really surprising that at the moment we even have a fall in food retail trade in Lithuania and this is a consequence of savings and uncertainty among the population, because it seems that consumers have started to limit even their spending on food. This means buying less non-essential foods that can be temporarily avoided.
When it comes to electronics, household appliances, here too we can see a fall for several months in a row and that people are giving up the most necessary expenses in order to better prepare for winter,” he said.
Increased income also has an impact
Vaidotas Šumskis, Senior Economist of the Macroprudential Analysis Department of the Bank of Lithuania, assured that the main reasons that led to the fact that inflation reached unprecedented heights in a quarter of a century and the residents’ savings almost did not decrease, can be considered the favorable situation in the labor market and growing incomes for employees.
“In the first 2022 since 2008, the number of employed Lithuanians has reached unprecedented heights: he worked and, accordingly, received over 1.4 million in income for his work. of the country’s population. During the year, the number of employed population increased by 5.6 percent.
Wages also grew rapidly – in 2022 in the second quarter, the average salary in the country was 12.3 percent. higher than a year ago, this helped to significantly mitigate the negative impact of high inflation and maintain the savings reserve,” he explained.
Played by Šumski
© DELFI / Tomas Juodelis
As stated, based on the data provided by “Sodra”, in Lithuania in 2022 the number of residents earning higher than the national average salary increased rapidly.
470 thousand people earned more than EUR 1000 “in their hands”. of the population – 23.2 percent. more than a year ago.
A. Izgorodins also spoke about the increased income as the reason why the amount of residents’ deposits increased.
The economist emphasized that one of the reasons for the savings of Lithuanians can be considered the rapidly growing salaries in the second quarter of the year, which in the private sector increased by 15% during the year.
“It should also be said that the labor market, both in terms of wages and employment, is a very inert thing and reacts to any difficult time, crisis rather late.
This means that despite the fact that we have a worsening economic situation, the labor market is still strong and people can afford to put more savings into saving,” added A. Izgorodin.
Accounts can be empty
A. Izgorodin assured that in mid-autumn we will see a drop in residents’ deposits.
“Unfortunately, that fall will be related to very objective reasons.
In October, we will have the start of the heating season and from October to March, residents will live with higher heating costs.
There was also already information that water may become more expensive, so the reality is that deposits will begin to shrink,” he explained.
The situation will also change in the labor market, according to the economist, it will worsen significantly.
“I will emphasize, it will deteriorate very, very badly. Our labor market, like the economy, is industrial, the biggest employer in Lithuania in the private sector is industry and it employs 22%. of all employed.
© DELFI / Julius Kalinskas
From October, we will see more companies shutting down, which means companies will lay off workers,” he said.
LB representative Vaidotas Šumskis said that looking into the future, population savings will mainly be determined by changes in prices, wages and employment, and changing expectations about the future and interest on deposits may also have an influence.
“As base rates start to rise, interest on new deposit arrangements also rises.
For example, in 2022 average interest rates on new deposit agreements longer than 2 years increased from 0.7 percent. at the beginning of January to 1.8 percent. in July
In the event that interest rates on deposits continue to rise, residents may decide to set aside a larger portion of their income for savings, which would also keep the amount of accumulated deposits at a high level.
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