iHned: Easing of restrictions means saving no longer priority for many

Czechs have in recent months shown an increased willingness to draw on the money they saved up during the Covid crisis, with banks reporting relatively high spending, iHned.cz reported.

The major Czech bank Česká spořitelna said that in June, following the easing of coronavirus restrictions, its clients had spent over CZK 26.7 billion in brick-and-mortar shops and through online retailers.

This was higher than the amount they shelled out last December, traditionally a time of high spending.

Experts believe that revived household consumption is one of the biggest drivers of the growth of the Czech economy, iHned.cz said.

The growth in spending can be seen in a comparison with the pre-pandemic period: the total volume of Česká spořitelna’s clients’ transactions (including ATM withdrawals) in June this year was around one-fifth higher than the figure for the same month in 2019.

This was most glaring in the case of e-retailers, where spending virtually doubled, iHned.cz reported.

Photo: Yannick McCabe-Costa,  Pixabay,  CC0 1.0 DEED

Patrik Madle, a spokesperson for the bank ČSOB, said its clients were also spending relatively freely: the volume of card payments in brick and mortar outlets has grown by one-fifth year-on-year in recent months, while online it has shot up by half.

ČSOB’s clients spent twice as much on online shopping in May and June this year than they did in the same period in 2019.

Česká spořitelna economist Michal Skořepa told iHned.cz that the explanation for these numbers was simple: There was a major easing of Covid restrictions pertaining to shops and services in May and Czechs began to draw on the financial reserves they had built up during the pandemic.

This is borne out by Czech National Bank data for May. It shows that the volume of household savings increased by only 0.2 percent month-on-month, the lowest figure for six months.

Since the beginning of the pandemic, people’s savings in banks have increased by almost CZK 410 billion crowns. Economists say that this is around double the amount that could be expected in normal circumstances.

Following last year’s 5.8 percent contraction in GDP, the biggest in the recent history of the Czech Republic, economists at Komerční banka, for example, expect a rise of 3.4 percent this year.

Household consumption will be one of the key drivers of the economy this year, the bank’s chief economis Jan Vejmělek told iHned.cz.