100 Billion Euros Expected to Reside in Finnish Savings Accounts by the End of this Summer
According to Hypo's chief economist, Juhana Brotherusa, it is estimated that 100 billion euros will be sitting in Finnish bank accounts by the end of this summer; exceeding the growth rate of domestic household loans. This record amount will be largely due to savings buffers introduced by households and an associated slow down in spending caused by the Coronavirus pandemic.
Savings buffers typically occur when household expenditure remains unchanged but there is an expectation that income flow will decrease during times of crisis. The same phenomenon also applies to corporate expenditure, with money being redirected to savings accounts during a perceived period of economic instability.
Under present conditions, Juhana Brotherus considers savings accounts to be a reasonable short term investment option for the average worker. However, one group that could benefit financially from the pandemic are workers in the health care sector. Their employment outlook is good and likely to experience increased stability. As such, these workers could look to invest in higher-yielding items such as stocks and bonds without too much risk or exposure.
According to Juhana Brotherus, Coronavirus has not led to a mass flight of small investors, contrary to previous fears, although companies have only continued to invest in mandatory items. Petteri Vaarnanen, Director of Asset Management at the Savings Bank Group, believes that people should continue to invest in shares, as stocks still have upside potential in the long run, with interest rates expected to remain very moderate.
There are potential investment opportunities in U.S stocks as the country has been hit particularly hard by the COVID-19 epidemic. In Europe, Britain and Sweden's economies have also been affected by higher than average infection levels so investors are also on the look out for possibilities. Of course, the economic effects of Coronavirus may just be the start of increased scrutiny for two of these countries in 2020 with the United States elections and Brexit still to come.
The good news for the Finnish economy is that the higher-than-normal level of savings residing in Finnish banks can be channeled to stimulate economic recovery. Savings will most certainly be responsible for a revival in private consumption once household confidence is restored.
* Full information and the source of this article can be found on the Ilta-Sanomat website
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