Global savers amass $5.4tn stockpile to spend after vaccine rollout

Since the beginning of the coronavirus pandemic, consumers around the world have saved an additional $5.4 trillion, and gained confidence that they can spend it as businesses reopen, Moody’s said in a note on Friday.

Credit rating agency Moody’s estimates that these additional savings account for more than 6 per cent of global gross domestic product when compared with 2019 spending patterns.

And studies show that growing consumer confidence around the world means that shoppers are willing to use it again as soon as stores, bars and restaurants reopen, when restrictions on controlling the spread of the virus are relaxed.  In the first quarter of this year, The Conference Board’s Global Consumer Confidence Index has reached its highest level since the record began in 2005, with significant increases in all parts of the world.

Mark Zandi, Chief Economist at Moody’s Analytics, said:

“Moody’s estimates that if consumers spend about one-third of their surplus savings, global production will increase by more than two percentage points both this year and next year.

While the world economy suffered the largest decline in production in modern history last year, household income has been largely protected by unprecedented government stimulus in most advanced economies. Consumers have also cut spending in the face of high uncertainty about work and income, and because many service businesses have been closed or restricted.”