Rising interest rates and price gains
Germans will have become significantly richer in 2023
January 1, 2024, 7:20 a.m
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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 ensures that saving is worthwhile again and the assets of private households are increasing significantly.
Private households in Germany will have become richer overall in 2023. Price gains on the stock markets and increased savings interest rates 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 decline and a gradual economic recovery, the prospects for the accumulation of financial assets by private households remain good in the new year,” writes DZ economist Michael Stappel. According to his assessment, financial assets are unlikely to grow as dynamically in 2024 as in 2023. However, the increase in assets is likely to be “quite solid” at a good four percent.
The latest official figures on the development of financial assets of private households in Germany are expected from the Deutsche Bundesbank in the spring. The Bundesbank most recently reported a value of around 7,492 billion euros for the second quarter of 2023. However, the sum was still a long way from the record level of 7,624 billion euros that was reached at the end of 2021.
Both the Bundesbank and the DZ Bank take into account cash and bank deposits, securities such as shares and funds as well as claims against insurance companies in their evaluations. DZ Bank’s numbers are higher because it includes non-profit organizations such as foundations and non-profit associations. Neither the Bundesbank nor the DZ Bank provide any information about the distribution of assets. Real estate is not taken into account in either analysis. Those who invested in stocks, funds and certificates often benefited from price gains in 2023. In total, according to calculations by DZ Bank, this increased the financial assets of people in Germany by around 200 billion euros.
High savings rate
However, the high savings rate is even more important for the growth in wealth of German private households than price gains and returns on securities and other investments. “The most reliable pillar of private household wealth accumulation remains savings,” says the analysis. Despite higher prices for energy and food, for example, people in Germany saved about as much 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 percent in the first six months of 2023. This means that for every 100 euros of disposable income, an average of 11.30 euros was saved. This corresponds to an average amount of 260 euros per resident per month. According to the Federal Office, the savings rate in the third quarter of 2023 was also 10.3 percent, above the value in the same period of the previous year (9.6 percent), as the disposable income of private households rose faster than private consumption.
The savings rate in Germany was significantly higher in the Corona years 2020 and 2021. During the pandemic, many people had more money left over than in normal times because, for example, vacation trips were canceled and leisure facilities were temporarily closed. Therefore, according to the latest figures from the Federal Statistical Office, the savings rate in Germany reached a record of 16.5 percent in 2020 and remained at a high level of 14.9 percent in 2021.
Last year the savings rate fell to 11.1 percent. DZ Bank economist Stappel assumes a stable savings rate of 11.2 percent for the full year 2023. An incentive for savers: After the interest rate change by the European Central Bank (ECB), call money and fixed-term deposits are finally earning interest again.