A third of the population of Latvia who saved money in banks has started to spend this autumn. “These are not many millions, but the trend is that savings are declining,” said Dainis Gašpuitis, an economist at SEB Bank.
"If, for example, in March, 25% of residents indicated they were forced to start spending their savings, it is already about a third in September. We can certainly say that this trend towards the end of the year will intensify further because the most difficult stage in terms of housing costs is still ahead," said the economist.
Not everyone will have this opportunity. A quarter of the SEB Bank survey's respondents said that they had no savings. Consequently, a large part of society will be in a difficult position because state aid will not be able to fully balance price increases.
Swedbank economist Agnese Buceniece also said that the bank's clients had started to spend.
“However, it has to be taken into account that these savings are extremely unevenly distributed. Less wealthy residents have far less in their accounts than the wealthy. [..] In general, deposits have stopped growing. There was a slight drop in July and August, which is likely to have continued in the last two months,” Buceniece said.
Population incomes aren't rising nearly as fast as prices are climbing. Purchasing power is declining significantly.
"Either reduce your spending, use savings, or borrow without changing your spending habits, or a combination of these options. We see growing interest in consumer credits. There is an increase compared to last year," said the Swedbank economist.
Citadele Bank economist Mārtiņš Āboliņš also confirmed that consumer lending has started to grow over several years.
“It is not possible to talk about a significant deterioration in the situation. Rather, in previous years, deposits were growing, but they are not growing at this time. Consumer lending is rising. The overall situation is that the financial situation is starting to deteriorate, but the big issue is what will happen during the winter months because we have not yet received the high heating bills,” noted Āboliņš.
He also stressed that the reasons for the decline in stocks are different because, in a situation where inflation is rising rapidly, there is a motivation to spend rather than save as money loses value.
Luminor Bank economist Pēteris Strautiņš said savings have stabilized in the household sector this year – it is neither rising nor declining sharply.
“If we look at total [savings], then they reached 11 billion last December and have not changed significantly since then. The highest point was in April, but now, in the August data, is €140 million less. It can be said that Latvian households have stopped piling up the big deposits of the pandemic," Strautiņš estimated.
At the beginning of 2020, the deposits of Latvian households amounted to around €7.5 billion. The growth rate was rapid, at around 20% a year. Deposits surged in the second half of last year, but have now stabilized.