Ljubljana – Household deposits at banks rose by over EUR 2 billion to a record EUR 23 billion in the epidemic year of 2020 from 2019, the Slovenian central bank said on Tuesday. It attributed the rise to the labour market measures taken during the epidemic, which enabled income growth. But since many shops were closed, much of the income was not spent.
Last year, the gross disposable income of households increased by 3.8% or EUR 1.1 billion over 2019.
“Although households had more funds available, private consumption in Slovenia strongly decreased, with similar trends witnessed in all the other eurozone members.
“The reasons are mostly related to restrictive measures needed to contain the spread of the virus, and partly also to precautionary behaviour of residents.”
Since many services and non-essential shops were at least partly limited or closed during the lockdowns, households spent around EUR 2.6 billion less than in 2019.
“Banka Slovenija has established that households largely transformed their income to savings”, which increased the savings rate by almost 11.7 points to 25%.
This was fuelled by the so called “forced savings” drive stemming from the inability to spend, while uncertainty largely fuelled “precautionary savings” drive at the start of the epidemic in spring.
Another trend from last year was slightly lower demand for consumer loans, which was also witnessed in many other eurozone member states.
The volume of consumer loans given out by banks and savings banks in Slovenia dropped by EUR 218 million.
The central bank estimates that once the epidemiological situation improves, the disposable income will start being spent on private consumption.
“This will again become an important driving force of economic activity in both Slovenia and other eurozone countries.”