German economy set to support retail savings market better than most European counterparts

Substantial deposit holdings will shield Germany’s retail savings and investment market from contraction, as GlobalData’s post-COVID-19 forecasts shows slight growth in 2020.

GlobalData’s forecasts for the total size of the investment market have been revised down from 2.5% initially, to 1.4% post-COVID-19, in 2020. This compares favorably to most other European countries, with negative growth predicted for France, Italy and Spain this year. Despite Germany’s economy faring better than some, it is still expected to fall into recession this year, as the IMP predict its real GDP to contract by 7% over the 2020.

Heike Van Den Hoevel, Senior Wealth Management Analyst at GlobalData, commented: “Germany’s stronger position can be attributed to a number of factors, including that high allocations to deposits will shield holdings from the downturn of financial markets; Germany was in a comparably stable financial position before the virus hit; and the country has the financial resources to prop up the economy and support business.

“While measures taken to weather the crisis are expected to drive gross debt up to 70% GDP, they will also support a rapid recovery, and we thus forecast retail savings investment growth to bounce back to 4.5% in 2021.”

GlobalData is not witnessing the same move away from cash as in other countries.

Van Den Hoevel  continues: “While many retailers have asked shoppers to pay with cards to minimize the spread of the virus, cash withdrawals more than doubled in March. However, we still expect retail deposit holdings to grow by 8.7% as investors are moving away from risk assets.”

Information based on GlobalData’s report: Covid-19 Sector Impact: Retail Savings & Investments – Germany

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