Bank deposits in the Czech Republic have more than doubled over the past five years, approaching four trillion crowns. However, this increase doesn’t reflect a rise in wealth for Czechs, as inflation has eroded the real value of these savings. In fact, in real terms, the amount in accounts is 15% lower than it was before the economic crisis.
Last week, the Ministry of Finance and the Czech National Bank (CNB) once again revised their economic growth forecasts downward, with experts pointing to cautious household spending as a significant factor. Despite having more money in the bank, many Czechs are still hesitant to spend, as they are concerned about future economic uncertainty.
Spending delays are not due to a lack of money, according to the Czech Statistical Office. Prior to the COVID-19 crisis in 2020, households typically saved between 11% and 12% of their income. However, during the pandemic, incomes largely remained stable, and with fewer opportunities to spend due to isolation, savings rates surged. By 2020 and 2021, the average Czech saved one crown out of every five earned, or received through government support.
Currently, the savings rate remains high, between 18% and 19%. “Czechs are preparing for the next crisis,” said Petr Dufek, Chief Economist at Creditas Bank. However, despite this increase in overall savings, a growing number of families are unable to save as much as they did before. A survey by sociologist Fialová found that while 65% of Czechs aged 18 to 65 were saving in March, by August, this number had dropped to 54%.
